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What changed in Stran & Company, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Stran & Company, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+375 added−556 removedSource: 10-K (2024-03-28) vs 10-K (2023-03-30)

Top changes in Stran & Company, Inc.'s 2023 10-K

375 paragraphs added · 556 removed · 295 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

99 edited+18 added−46 removed143 unchanged
Biggest changeSeasonality and Cyclicality Our business is generally not subject to seasonal fluctuations. While certain customers have seasonal businesses, the promotional products industry overall is not. Our net sales and profits sometimes are impacted by the holiday selling season. Portions of the promotional products industry are cyclical in nature. Generally, when economic conditions are favorable, the industry tends to perform well.
Biggest changeSeasonality and Cyclicality Our business and the promotional products industry overall is generally subject to some seasonal fluctuations.
With multiple warehouses strategically located throughout the United States, we offer logistics solutions and expertise to effectively fulfill customers’ events needs across the country. The internal inventory-management version of our e-commerce platform provides the ability to manage not only a customer’s assets for its booth or event setup, but also its literature, giveaways, uniforms, and more.
With multiple warehouses strategically located throughout the United States, we offer logistics solutions and expertise to effectively fulfill customers’ events needs across the country. The internal inventory-management version of our e-commerce platform provides the ability to manage not only a customer’s assets for its booth or event setup, but also its literature, giveaways, and more.
Shape and Birney provide that the shares are also subject to a lockup provision providing that one-half of the purchased shares may not be sold until the second anniversary of the date of the stock purchase agreement, or May 24, 2023; provided, however, that such restriction on transfer will expire at a rate of 1/48 th of the shares subject to the restriction per month over such two-year period.
Shape and Birney provided that the shares are also subject to a lockup provision providing that one-half of the purchased shares may not be sold until the second anniversary of the date of the stock purchase agreement, or May 24, 2023; provided, however, that such restriction on transfer will expire at a rate of 1/48 th of the shares subject to the restriction per month over such two-year period.
Unlike our company, which provides comprehensive solutions to complex promotional and branding challenges, we view most of our competitors as generally falling into one of the five categories below: ● Online e-tailer. Heavily rely on marketing and online advertising to sell directly to businesses, offering little or no strategic support or program infrastructure. 2 ● Franchise Model.
Unlike our company, which provides comprehensive solutions to complex promotional and branding challenges, we view most of our competitors as generally falling into one of the five categories below: ● Online e-tailer. Heavily rely on marketing and online advertising to sell directly to businesses, offering little or no strategic support or program infrastructure. ● Franchise Model.
To that end, we are working on finalizing a contract with a third-party emissions auditor to help us identify our historical, or “baseline,” Scope 1-3 carbon emissions. Scope 1 emissions are direct greenhouse (GHG) emissions that occur from sources that are controlled or owned by an organization (e.g., emissions associated with fuel combustion in boilers, furnaces, vehicles).
To that end, we are working on finalizing a contract with a third-party emissions auditor to help us identify our historical, or “baseline,” Scope 1-3 carbon emissions. Scope 1 emissions are direct greenhouse gas (GHG) emissions that occur from sources that are controlled or owned by an organization (e.g., emissions associated with fuel combustion in boilers, furnaces, vehicles).
Do not have the financial backing, technology, or infrastructure to support growth or ability to execute comprehensive marketing programs or large opportunities. Promotional Products are a High-impact, Cost-effective Advertising Medium Because promotional products are useful and appreciated by recipients, they are retained and used, repeating the imprinted message many times without added cost to the advertiser.
Do not have the financial backing, technology, or infrastructure to support growth or ability to execute comprehensive marketing programs or large opportunities. 2 Promotional Products are a High-impact, Cost-effective Advertising Medium Because promotional products are useful and appreciated by recipients, they are retained and used, repeating the imprinted message many times without added cost to the advertiser.
We will ship out all assets with return labels for post-show logistics and establish standard operating procedures for every asset to be returned back into inventory. Other strategies that we plan to implement to expand our customer base with expanded sales staff and technology resources include: o Convert Transactional Customers to Programs .
We will ship out all assets with return labels for post-show logistics and establish standard operating procedures for every asset to be returned back into inventory. 5 Other strategies that we plan to implement to expand our customer base with expanded sales staff and technology resources include: o Convert Transactional Customers to Programs .
We intend to continue making significant investments in research and development and hiring top technical talent. 6 ● New Client Development . Our sales and marketing teams are tasked with continuously growing their books of business by nurturing existing business relationships while actively seeking new opportunities with new customers.
We intend to continue making significant investments in research and development and hiring top technical talent. ● New Client Development . Our sales and marketing teams are tasked with continuously growing their books of business by nurturing existing business relationships while actively seeking new opportunities with new customers.
We believe our market position and scale enhances our ability to increase sales to existing customers, attract new customers and enter into new markets. ● Extensive Network. We have developed a deep network of collaborator factories, decorators, printers, and warehouses around the globe.
We believe our market position and scale enhances our ability to increase sales to existing customers, attract new customers and enter into new markets. 3 ● Extensive Network . We have developed a deep network of collaborator factories, decorators, printers, and warehouses around the globe.
For example, we can offer a one-stop solution for all tradeshow and event asset management objectives. From pre-show mailings to special event uniforms, we can help design as well as produce and manage all tradeshow materials and processes from start to finish.
For example, we can offer a one-stop solution for all tradeshow and event asset management objectives. From pre-show mailings to special event materials, we can help design as well as produce and manage all tradeshow materials and processes from start to finish.
Failure to comply with U.S. and international data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business. 17 Environmental Regulations We use certain plastic, glass, fabric, metal and other products in our business which may be harmful if released into the environment.
Failure to comply with U.S. and international data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business. 15 Environmental Regulations We use certain plastic, glass, fabric, metal and other products in our business which may be harmful if released into the environment.
We also have sales representatives in 17 additional locations across the United States and a network of service providers in the U.S. and abroad, including factories, decorators, printers, logistics firms, and warehouses. 1 Our Industry Overview of Promotional Products Market The promotional products industry is large yet highly-fragmented, with thousands of smaller participants and indications of a lack of market power in any one firm or group of firms.
We also have sales representatives in 20 additional locations across the United States and a network of service providers in the U.S. and abroad, including factories, decorators, printers, logistics firms, and warehouses. 1 Our Industry Overview of Promotional Products Market The promotional products industry is large yet highly-fragmented, with thousands of smaller participants and indications of a lack of market power in any one firm or group of firms.
Harte Hanks completes over 3 million on-time shipments of time-sensitive materials each year. Being able to integrate print, product, packaging, kitting, and direct mail, we help our client be more impactful and efficient with their promotional marketing efforts. 14 Intellectual Property We conduct our business using the registered trademark “STRÄN” and the registered trade name “Stran Promotional Solutions”.
Harte Hanks completes over 3 million on-time shipments of time-sensitive materials each year. Being able to integrate print, product, packaging, kitting, and direct mail, we help our client be more impactful and efficient with their promotional marketing efforts. 12 Intellectual Property We conduct our business using the registered trademark “STRÄN” and the registered trade name “Stran Promotional Solutions”.
Effective January 1, 2023, we also became subject to the California Privacy Rights Act, which expands upon the consumer data use restrictions, penalties and enforcement provisions under the California Consumer Privacy Act.
Effective January 1, 2023, we also became subject to the California Privacy Rights Act (the “CPRA”), which expands upon the consumer data use restrictions, penalties and enforcement provisions under the California Consumer Privacy Act.
We anticipate additional, similar legal requirements may be proposed or enacted in the future at local, state and federal levels, both in the United States and elsewhere. 16 New legislation or regulation, the application of laws from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the Internet and e-commerce generally could result in significant additional taxes on our business.
We anticipate additional, similar legal requirements may be proposed or enacted in the future at local, state and federal levels, both in the United States and elsewhere. 14 New legislation or regulation, the application of laws from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the internet and e-commerce generally could result in significant additional taxes on our business.
Products and Services Overview Since our inception over 27 years ago, we have provided clients with marketing services that help drive sales, and make an impact using custom-branded merchandise, commercial print, loyalty and incentive programs, packaging and point of sale solutions while providing a technology solution to deliver these products and services efficiently via our warehouse and fulfillment system.
Products and Services Overview Since our inception over 28 years ago, we have provided clients with marketing services that help drive sales, and make an impact using custom-branded merchandise, commercial print, loyalty and incentive programs, packaging and point of sale solutions while providing a technology solution to deliver these products and services efficiently via our warehouse and fulfillment system.
Management’s Discussion and Analysis of Results of Operations and Financial Condition – Liquidity and Capital Resources – December 2021 Private Placement ” for further discussion of this transaction. 19 On January 31, 2022, we acquired substantially all of the assets used in the branding, marketing and promotional products and services business of G.A.P. Promotions . See “Item 7.
Management’s Discussion and Analysis of Results of Operations and Financial Condition – Liquidity and Capital Resources – December 2021 Private Placement ” for further discussion of this transaction. 17 On January 31, 2022, we acquired substantially all of the assets used in the branding, marketing and promotional products and services business of G.A.P. Promotions . See “Item 7.
The foregoing description of each stock purchase agreement and promissory note described above is qualified in its entirety by reference to the full text of such documents which are filed as Exhibit 10.9, Exhibit 10.10, Exhibit 10.11, and Exhibit 10.12 to this Annual Report, respectively, and which are incorporated herein by reference. On May 24, 2021, Mr.
The foregoing description of each stock purchase agreement and promissory note referenced above is qualified in its entirety by reference to the full text of such documents which are filed as Exhibit 10.9, Exhibit 10.10, Exhibit 10.11, and Exhibit 10.12 to this Annual Report, respectively, and which are incorporated herein by reference. On May 24, 2021, Mr.
Our headquarters are located at Quincy, Massachusetts, with additional offices located in Warsaw, Indiana; Mt. Pleasant, South Carolina; and Tomball, Texas.
Our headquarters are located at Quincy, Massachusetts, with additional offices located in Warsaw, Indiana; Mt. Pleasant, South Carolina; Walpole, Massachusetts; and Tomball, Texas.
For over 27 years, we have developed these strategic relationships in order to offer our clients a powerful solution for their branded merchandise needs. Together, we have experience in developing custom marketing solutions for our clients and regularly kit together promotional printed items and branded product into a single package.
For over 28 years, we have developed these strategic relationships in order to offer our clients a powerful solution for their branded merchandise needs. Together, we have experience in developing custom marketing solutions for our clients and regularly kit together promotional printed items and branded product into a single package.
The shares were formerly subject to a repurchase right which lapsed upon the occurrence of the IPO. Subject to the above remaining restrictions, Messrs.
The shares were also formerly subject to a repurchase right which lapsed upon the occurrence of the IPO. Subject to the above remaining restrictions, Messrs.
Our customers span many industries, including pharmaceutical and healthcare, manufacturing, technology, finance, construction and consumer goods. 5 ● Experienced Senior Management Team . Our senior management team, led by our co-founder and Chief Executive Officer, Andrew Shape, is comprised of seasoned industry professionals and veterans of our company.
Our customers span many industries, including pharmaceutical and healthcare, manufacturing, technology, finance, construction and consumer goods. ● Experienced Senior Management Team . Our senior management team, led by our co-founder and Chief Executive Officer and President, Andrew Shape, is comprised of seasoned industry professionals and veterans of our company.
From this acquisition, we expanded our major beverage-specific customer accounts; hired 13 additional employees; gained inventory worth approximately $90,000 with claw-back guarantees; and gained a business with sales of approximately $7.2 million as of 2021. In August 2022, we acquired the promotional products business and assets of Trend Brand Solutions in Houston-area Tomball, Texas.
From this acquisition, we expanded our major beverage-specific customer accounts; hired 13 additional employees; gained inventory worth approximately $90,000; and gained a business with sales of approximately $7.2 million as of 2021. In August 2022, we acquired the promotional products business and assets of Trend Brand Solutions in Houston-area Tomball, Texas.
Theseus does not have any relationship with the Company other than as a stockholder after the transfer by Mr. Stranberg, and its payment for Mr. Stranberg’s stock was made to Mr. Stranberg and not to the Company.
Theseus did not have any relationship with the Company other than as a stockholder after the transfer by Mr. Stranberg, and its payment for Mr. Stranberg’s stock was made to Mr. Stranberg and not to the Company.
Other Regulations We are subject to international, federal, national, regional, state, local and other laws and regulations affecting our business, including those promulgated under the Occupational Safety and Health Act, the Consumer Product Safety Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the rules and regulations of the Consumer Products Safety Commission, the Food, Drug, and Cosmetic Act, the Foreign Corrupt Practices Act of 1977 (the “FCPA”), various securities laws and regulations including but not limited to the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Securities Act of 1933, as amended, or the Securities Act, the Listing Rules of The Nasdaq Stock Market LLC, or Nasdaq, various labor, workplace and related laws, and environmental laws and regulations.
Other Regulations We are subject to international, federal, national, regional, state, local and other laws and regulations affecting our business, including those promulgated under the Occupational Safety and Health Act, the Consumer Product Safety Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the rules and regulations of the Consumer Products Safety Commission, the Food, Drug, and Cosmetic Act, the Foreign Corrupt Practices Act of 1977 (the “FCPA”), various securities laws and regulations including but not limited to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Securities Act of 1933, as amended (the “Securities Act”), the Listing Rules of The Nasdaq Stock Market LLC (“Nasdaq”), various labor, workplace and related laws, and environmental laws and regulations.
The shares are subject to a market standoff provision restricting transfers and other dispositions of the shares as reasonably requested by the Company and its underwriter until the date that is two years after its initial public offering, which occurred on November 8, 2021 (the “IPO”).
The shares were also subject to a market standoff provision restricting transfers and other dispositions of the shares as reasonably requested by the Company and its underwriter until the date that is two years after its initial public offering, which occurred on November 8, 2021 (the “IPO”).
Should any of these suppliers terminate their relationship with us or fail to provide the agreed-on services, we believe that there would be sufficient alternatives to continue to meet customer demand and comply with our contractual obligations without interruption. Marketing We have a direct sales team consisting of over 27 outside sales representatives and 25 in-house sales representatives.
Should any of these suppliers terminate their relationship with us or fail to provide the agreed-on services, we believe that there would be sufficient alternatives to continue to meet customer demand and comply with our contractual obligations without interruption. Marketing We have a direct sales team consisting of over 36 outside sales representatives and 30 in-house sales representatives.
Moreover, the promotional products market is only one segment of a total addressable market of possibly up to $380 billion based on the size of the product packaging market ($185 billion as of 2021, according to Mordor Intelligence, a leading market intelligence and advisory firm); the loyalty incentive programs market ($90 billion annually according to the Incentive Marketing Association, the umbrella organization for suppliers in the incentive marketplace); the printing market ($83 billion projected for 2023, according to IBISWorld, an industry research provider); and the trade show and conference planning market ($22 billion projected for 2023, according to IBISWorld).
Moreover, the promotional products market is only one segment of a total addressable market of possibly up to $406 billion, based on the size of the promotional products market ($26.1 billion in 2023 according to ASI); the product packaging market ($185 billion as of 2021, according to Mordor Intelligence, a leading market intelligence and advisory firm); the loyalty incentive programs market ($90 billion annually according to the Incentive Marketing Association, the umbrella organization for suppliers in the incentive marketplace); the printing market ($83 billion projected for 2023, according to IBISWorld, an industry research provider); and the trade show and conference planning market ($22 billion projected for 2023, according to IBISWorld).
The relationship between Stran and Harte Hanks has been fine-tuned over a nearly ten-year period and allows Stran to do what we do best, which is the creativity, product procurement, technology and account management while allowing Harte Hanks to do what they do best, which is process-driven fulfillment.
The relationship between Stran and Harte Hanks has been fine-tuned over a twelve-year period and allows Stran to do what we do best, which is the creativity, product procurement, technology and account management while allowing Harte Hanks to do what they do best, which is process-driven fulfillment.
The publicly-traded warrants were immediately exercisable and will expire on the fifth anniversary of the original issuance date. The units were not certificated. The shares of common stock and publicly-traded warrants were immediately separable and were issued separately, though they were issued and purchased together as a unit in the offering. See “Item 5.
The publicly-traded warrants were immediately exercisable and will expire on the fifth anniversary of the original issuance date. The units were not certificated. The shares of common stock and publicly-traded warrants were immediately separable and were issued separately, though they were issued and purchased together as a unit in the offering.
Facilisgroup, a buying group of fewer than 1% of distributors in the industry, processed over $1.15 billion of sales in 2021. Pursuant to our Sublicense Agreement, we may access Facilisgroup’s @ease proprietary software tools for promotional products business management and analysis and a white labelled, managed, product website which we may use to sell promotional products under our brand.
Facilisgroup, a buying group of fewer than 1% of distributors in the industry, processed over $1.4 billion of sales in 2022. Pursuant to our Sublicense Agreement, we may access Facilisgroup’s @ease proprietary software tools for promotional products business management and analysis and a white labelled, managed, product website which we may use to sell promotional products under our brand.
Each note grants a security interest to Mr. Stranberg in the transferred shares as to the repayment obligations under the note. 18 The stock purchase agreements between Mr. Stranberg and Messrs.
Each note grants a security interest to Mr. Stranberg in the transferred shares as to the repayment obligations under the note. 16 The stock purchase agreements between Mr. Stranberg and Messrs.
Effective July 1, 2023, we will also become subject to the Colorado Privacy Act and Connecticut’s An Act Concerning Personal Data Privacy and Online Monitoring, which are also comprehensive consumer privacy laws. Effective December 31, 2023, we will also become subject to the Utah Consumer Privacy Act, regarding business handling of consumers’ personal data.
Effective July 1, 2023, we also became subject to the Colorado Privacy Act and Connecticut’s An Act Concerning Personal Data Privacy and Online Monitoring, which are also comprehensive consumer privacy laws. Effective December 31, 2023, we also became subject to the Utah Consumer Privacy Act, regarding business handling of consumers’ personal data.
On May 24, 2021, we changed our state of incorporation to the State of Nevada by merging into Stran & Company, Inc., a Nevada corporation that was incorporated on May 19, 2021, and changed the spelling of our name to “Stran & Company, Inc.” In addition, on May 24, 2021 , o ur authorized capital stock changed from 200,000 shares of common stock, $0.01 par value, to 350,000,000 shares, consisting of 300,000,000 shares of common stock, $0.0001 par value per share, and 50,000,000 shares of “blank check” preferred stock, $0.0001 par value per share.
On May 24, 2021, we changed our state of incorporation to the State of Nevada by merging into Stran & Company, Inc., a Nevada corporation that was incorporated on May 19, 2021, and changed the spelling of our name to “Stran & Company, Inc.” In addition, on May 24, 2021 , o ur authorized capital stock changed from 200,000 shares of common stock, $0.01 par value, to 350,000,000 shares, consisting of 300,000,000 shares of Common Stock, $0.0001 par value per share (“common stock”), and 50,000,000 shares of Preferred Stock, $0.0001 par value per share (“preferred stock”).
We anticipate that by the end of the second quarter of 2023, our baseline Scope 1 and 2 emissions data will be established and to begin our evaluation of Scope 3 emissions with Ecovadis prior to completing our Scope 3 emissions audit. ● Integration . Offering our clients an industry-leading technology platform that stands alone only adds so much value.
We anticipate that by the end of 2024, our baseline Scope 1 and 2 emissions data will be established and to begin our evaluation of Scope 3 emissions with Ecovadis prior to completing our Scope 3 emissions audit. ● Integration . Offering our clients an industry-leading technology platform that stands alone only adds so much value.
By offering print management with our promotional branded merchandise solutions, we help our customers create impactful presentations and mailings through the most efficient processes. Warehouse and Fulfillment We offer a global solution for warehousing and fulfillment through a network of fulfillment providers including a nearly ten-year relationship with industry leader Harte Hanks.
By offering print management with our promotional branded merchandise solutions, we help our customers create impactful presentations and mailings through the most efficient processes. 7 Warehouse and Fulfillment We offer a global solution for warehousing and fulfillment through a network of fulfillment providers including a twelve-year relationship with industry leader Harte Hanks.
Our expertise in product development and sourcing, technology development, and program management combined with our various collaborators’ superior warehousing, logistics, fulfillment, distribution and print services are a competitive advantage. 10 We offer a global solution for warehousing and fulfillment through a network of fulfillment providers including a nearly ten-year relationship with industry leader Harte Hanks.
Our expertise in product development and sourcing, technology development, and program management combined with our various collaborators’ superior warehousing, logistics, fulfillment, distribution and print services are a competitive advantage. We offer a global solution for warehousing and fulfillment through a network of fulfillment providers including a twelve-year relationship with industry leader Harte Hanks.
We sell our products to over 2,000 active customers and over 30 Fortune 500 companies, including long-standing programs with recurring revenue coming from well recognized brands and companies. Our largest customer accounted for 8.8% and 7.5% of overall revenue during 2022 and 2021, respectively. Our top 10 customers in 2022 and 2021 contributed 42.5% and 44.8% of revenue, respectively.
We sell our products to over 2,000 active customers and over 30 Fortune 500 companies, including long-standing programs with recurring revenue coming from well recognized brands and companies. Our largest customer accounted for 13.2% and 8.8% of overall revenue during 2023 and 2022, respectively. Our top 10 customers in 2023 and 2022 contributed 44.0% and 42.5% of revenue, respectively.
If there is a back-order situation where an order would not be able to ship complete or on time, our Client Services team will review the order and advise the customer on the best and timeliest options to fulfill the order.
If there is a back-order situation where an order would not be able to ship complete or on time, the appropriate team will review the order and advise the customer on the best and timeliest options to fulfill the order.
The majority of our revenue is derived from program business, although only a small percentage of our customers are considered programmatic. For the years 2022 and 2021, program clients accounted for 82.2% and 75.7% of total revenue, respectively. Less than 350 of our more than 2,000 active customers are considered to be program clients.
The majority of our revenue is derived from program business, although only a small percentage of our customers are considered programmatic. For the years 2023 and 2022, program clients accounted for 77.2% and 82.2% of total revenue, respectively. Less than 350 of our more than 2,000 active customers are considered to be program clients.
We incentivize our representatives with a commission structure. Our marketing approach combines the sales funnel concept of the marketing process with digital and in-person marketing efforts.
We incentivize our representatives with a competitive compensation, incentive, and commission structure. Our marketing approach combines the sales funnel concept of the marketing process with digital and in-person marketing efforts.
Our sales increased 48.5% year-over-year in 2022 compared to 2021, which we believe was primarily due to higher spending from existing clients as well as business from new customers. Additionally, we benefited from the acquisition of the G.A.P. Promotions, LLC, or G.A.P.
Our sales increased 28.7% year-over-year in 2023 compared to 2022, which we believe was primarily due to higher spending from existing clients as well as business from new customers. Additionally, we benefited from the acquisition of the G.A.P. Promotions, LLC, or G.A.P.
Management’s Discussion and Analysis of Results of Operations and Financial Condition – Liquidity and Capital Resources – Contractual Obligations – Premier NYC Acquisition ” for further discussion of this transaction. As of the date of this report, we have no subsidiaries.
Management’s Discussion and Analysis of Results of Operations and Financial Condition – Liquidity and Capital Resources – Contractual Obligations – T R Miller Acquisition ” for further discussion of this transaction. As of the date of this report, we have no subsidiaries.
We have also invested in an internal commercial Enterprise Resource Planning (ERP) system, Oracle/NetSuite’s NetSuite ERP, which is expected to enhance the process of gathering and organizing the business data of our company through an integrated software suite, and is expected to be implemented in the first half of 2023. ● Leading Market Position .
We have also invested in an internal commercial Enterprise Resource Planning (ERP) system, Oracle/NetSuite’s NetSuite ERP, which is expected to enhance the process of gathering and organizing the business data of our company through an integrated software suite, and is expected to be implemented in the second half of 2024.
We are both program managers and creative marketers, having developed multiple teams within our organization to specialize and focus our efforts on supporting customers with the specific support that they need: ● Operations and e-commerce teams create custom-tailored technology solutions that enable our clients to view, manage and distribute branded merchandise to their appropriate audience in an efficient and cost-effective manner. ● Account teams work with client stakeholders to understand goals, objectives, marketing and human-resources initiatives, and the ongoing management of the account. ● In-house creative agency and product merchandising teams support the account team to provide unique and custom product ideas along with additional design services such as billboards, annual reports, and digital ad assets. ● Merchandising team as well as members of our account teams attend trade shows domestically and internationally across a variety of markets, allowing us to provide a diverse assortment of product offerings to our clients. ● Technology and program teams offer technology solutions to help efficiently manage the order process, view products and inventory available, distribute products in the most cost-effective manner, and provide reports and metrics on the activity of the account. 8 We work closely with industrial designers of several of our key collaborators to understand the research and trends that are influencing product development in the six- to 18-month window ensuring that our team is up-to-date on trends in the industry.
We are both program managers and creative marketers, having developed multiple teams within our organization to specialize and focus our efforts on supporting customers with the specific support that they need: ● Operations and e-commerce teams create custom-tailored technology solutions that enable our clients to view, manage and distribute branded merchandise to their appropriate audience in an efficient and cost-effective manner. ● Account teams work with client stakeholders to understand goals, objectives, marketing and human-resources initiatives, and the ongoing management of the account. 6 ● In-house creative agency and product merchandising teams support the account team to provide unique and custom product ideas along with additional design services such as billboards, annual reports, and digital ad assets. ● Merchandising team as well as members of our account teams attend trade shows domestically and internationally across a variety of markets, allowing us to provide a diverse assortment of product offerings to our clients. ● Technology and program teams offer technology solutions to help efficiently manage the order process, view products and inventory available, distribute products in the most cost-effective manner, and provide reports and metrics on the activity of the account.
We utilize these relationships to help drive down costs for our clients. In order to ensure that we can bring products to market quickly and reduce the possibility of backorders, Stran uses a blended approach to sourcing. We work with our domestic supply base to bookend our overseas inventory purchases. Stran purchases and owns inventory for many clients.
In order to ensure that we can bring products to market quickly and reduce the possibility of backorders, Stran uses a blended approach to sourcing. We work with our domestic supply base to bookend our overseas inventory purchases. Stran purchases and owns inventory for many clients.
Currently we have employees or sales reps located in offices or remotely in Colorado, Connecticut, Florida, Illinois, Indiana, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, and Virginia.
Currently we have employees or sales reps located in offices or remotely in Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, and Texas.
We believe that this ERP will reduce inefficiencies, expenses and headcount, automate current manual processes, and potentially contribute to growing net revenues. Human Capital and Culture We are more than an efficient distributor or supplier, and we offer our customers more than just products.
NetSuite combines accounting, order management, inventory, CRM, and presentation functionality. We believe that this ERP will reduce inefficiencies, expenses and headcount, automate current manual processes, and potentially contribute to growing net revenues. Human Capital and Culture We are more than an efficient distributor or supplier, and we offer our customers more than just products.
Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery, or other forms of deceiving our team members, contractors, and vendors. Employees As of March 27, 2023, we employed 98 full-time employees, two part-time employees and eight independent contractors.
Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery, or other forms of deceiving our team members, contractors, and vendors. Employees As of March 20, 2024, we employed 118 full-time employees, 3 part-time employees and 16 independent contractors.
During 2017 through 2022, we had consistent gross margins of approximately 30%, and processed more than 50,000 customer orders per year. As of December 31, 2022, we had total assets of $56.6 million with total stockholder equity of $39.4 million.
During 2018 through 2023, we had consistent gross margins of approximately 30%, and processed more than 50,000 customer orders per year. As of December 31, 2023, we had total assets of $61.6 million with total stockholder equity of $39.5 million.
Our platform creates cost savings, increasing market efficiencies and brand consistency. With real-time accessibility to the necessary data to operate a complex demanding marketing program including hierarchy user profile groups, multi-lingual, multi-currency, multi-checkout methods and integration into many major ERP systems (SAP ERP, NetSuite ERP, Workday, etc.).
With real-time accessibility to the necessary data to operate a complex demanding marketing program including hierarchy user profile groups, multi-lingual, multi-currency, multi-checkout methods and integration into many major ERP systems (SAP ERP, NetSuite ERP, Workday, etc.).
Promotions, assets in January 2022, the assets of Trend Promotional Marketing Corporation (d/b/a Trend Brand Solutions), or Trend Brand Solutions, in August 2022, and the assets of Premier Business Services, or Premier NYC, in December 2022.
Promotions, assets in January 2022, the assets of Trend Promotional Marketing Corporation (d/b/a Trend Brand Solutions), or Trend Brand Solutions, in August 2022, the assets of Premier Business Services, or Premier NYC, in December 2022, and T R Miller Co., Inc., or T R Miller, in June 2023, respectively .
In January 2022, we purchased the promotional products business and assets of G.A.P. Promotions, with 2021 revenue of approximately $7.2 million. In August and December, 2022, we also acquired the promotional products businesses and assets of Texas-based Trend Brand Solutions and New York-based Premier NYC, respectively.
Promotions, with 2021 revenue of approximately $7.2 million. In August and December, 2022, we also acquired the promotional products businesses and assets of Texas-based Trend Brand Solutions and New York-based Premier NYC, respectively. In June 2023, we also acquired the promotional products business and assets of Massachusetts-based T R Miller .
Further, we are affected by economic, political and other conditions in the United States and internationally, including those resulting in the imposition or increase of import duties, tariffs and other import regulations and widespread health emergencies, which could have a material adverse effect on our business.
Further, we are affected by economic, political and other conditions in the United States and internationally, including those resulting in the imposition or increase of import duties, tariffs and other import regulations and widespread health emergencies, which could have a material adverse effect on our business. 13 Laws and Regulations Relating to E-Commerce Our business is subject to a variety of laws and regulations applicable to companies conducting business on the internet.
When the economy is weak or if there are economic disturbances that create uncertainty with corporate profits, the promotional products industry tends to experience low or negative growth. Security We regularly receive and store information about our customers, vendors and other third parties. We have programs in place to detect, contain, and respond to data security incidents.
Generally, when economic conditions are favorable, the industry tends to perform well. When the economy is weak or if there are economic disturbances that create uncertainty with corporate profits, the promotional products industry tends to experience low or negative growth. Security We regularly receive and store information about our customers, vendors and other third parties.
Promotional Product Programs We run complex corporate promotional marketing programs for clients across many different industry verticals. Most of our clients take advantage of all the services we provide; however, at the core of every program are the promotional products themselves. Our team works diligently to stay on point with the current trends so our clients’ branded products are relevant.
Most of our clients take advantage of all the services we provide; however, at the core of every program are the promotional products themselves. Our team works diligently to stay on point with the current trends so our clients’ branded products are relevant.
There are only two firms that have reported achieving revenues above $1 billion in 2022. As a group, the top 40 distributors had approximately 32.7% market share as of 2021, based on total sales of approximately $7.6 billion out of total North American promotional products distributors’ revenues for 2021 of $23.2 billion, based on ASI’s reports.
There are only two firms that have reported achieving sales above $1.0 billion in 2023. As a group, the top 40 distributors had approximately 37.5% market share as of 2022, based on total sales of approximately $9.7 billion out of total promotional products distributors’ revenues for 2022 of $25.8 billion, based on ASI’s reports.
We have also invested in an internal commercial ERP system, NetSuite ERP, which is expected to enhance the process of gathering and organizing the business data of our company through an integrated software suite, and is expected to be implemented in the first half of 2023.
We have also invested in an internal commercial ERP system, NetSuite ERP, which is expected to enhance the process of gathering and organizing the business data of our company through an integrated software suite, and is expected to be implemented in the second half of 2024. Additional NetSuite phases will be planned and rolled out in subsequent years.
From this acquisition, we diversified and expanded our customers’ geographic accounts; gained eight additional employees; acquired inventory worth approximately $124,000 with claw-back guarantees; obtained a warehouse with kitting and fulfillment capabilities; and gained a business with annualized sales of approximately $3 million as of 2022.
From this acquisition, we diversified and expanded our customers’ geographic accounts; gained eight additional employees; acquired inventory worth approximately $124,000; obtained a warehouse with kitting and fulfillment capabilities; and gained a business with annualized sales of approximately $3 million as of 2022. In December 2022, we acquired the promotional products business and assets of Premier NYC in Larchmont, New York.
In December 2022, we acquired the promotional products business and assets of Premier NYC in Larchmont, New York. From this acquisition, we acquired a business with annualized sales of approximately $2 million as of 2022 and a number of noteworthy customers including several large law firms and a national stock exchange.
From this acquisition, we acquired a business with annualized sales of approximately $2 million as of 2022 and a number of noteworthy customers including several large law firms and a national stock exchange. In June 2023, we acquired the promotional products business and assets of T R Miller in Walpole, Massachusetts.
As of 2022, the firm with the greatest percentage of industry sales generated $1.1 billion in revenue but made up only approximately 4.4% of the $25.8 billion in revenues generated in 2022 by North American promotional products distributors, based on information reported by ASI and the firm itself.
As of 2023, the firm with the greatest percentage of industry sales generated $1.3 billion in sales but made up only approximately 5.1% of the $26.1 billion in sales generated in 2023 by promotional products distributors, based on information reported by ASI and the firm itself.
Similarly, if customers or potential customers perceive the products or services offered by our existing or future competitors to be of higher quality than ours or part of a broader product mix, our revenues may decline, which would adversely affect our operating results. 12 Our Program Management We are experienced and industry-leading program managers who integrate all aspects of a successful program.
Similarly, if customers or potential customers perceive the products or services offered by our existing or future competitors to be of higher quality than ours or part of a broader product mix, our revenues may decline, which would adversely affect our operating results.
Meanwhile, several other states and the federal government have considered or are considering privacy laws like the CCPA. We will continue to monitor and assess the impact of these laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
We will continue to monitor and assess the impact of these laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
Growth Strategies The key elements of our strategy to grow our business include: ● Selectively Pursue Acquisitions . We believe that we are well-suited to capitalize on opportunities to acquire businesses with key customer relationships or have other value-added products or services that complement our current offerings.
We believe that we are well-suited to capitalize on opportunities to acquire businesses with key customer relationships or have other value-added products or services that complement our current offerings.
While our customer contracts are typically auto-renewing and we have many long-term established customer relationships, most of our customer contracts do not have any minimum or exclusive purchase guarantees, other than as to inventory already ordered by them or their program participants. There is no assurance of recurring revenues.
All other customers generated less than 5% of sales, and the vast majority generated less than 1% of sales. 9 While our customer contracts are typically auto-renewing and we have many long-term established customer relationships, most of our customer contracts do not have any minimum or exclusive purchase guarantees, other than as to inventory already ordered by them or their program participants.
Our over 27 years’ history and size make us a leader in the U.S. promotional products industry. We believe that the key benefits of our scale include an ability to efficiently implement large and intensive programs; an ability to invest in sales tools and technologies to support our customers; and operating efficiencies from our scalable infrastructure.
We believe that the key benefits of our scale include an ability to efficiently implement large and intensive programs; an ability to invest in sales tools and technologies to support our customers; and operating efficiencies from our scalable infrastructure.
Supplier and Fulfillment Relationships We have formed strategic relationships with fulfillment and commercial print providers in the United States in order to effectively warehouse and distribute merchandise from one or more of our warehouse facilities depending on our customer’s requirements.
We compete regularly with larger competitors and maintain healthy margins using this strategy for sourcing and procuring products. 8 Supplier and Fulfillment Relationships We have formed strategic relationships with fulfillment and commercial print providers in the United States in order to effectively warehouse and distribute merchandise from one or more of our warehouse facilities depending on our customer’s requirements.
Since our first year of operations in 1995, our annual revenues have gradually grown from approximately $240,000 to $59.0 million in 2022, a compound annual growth rate of approximately 22.6%, and between 2017 and 2022, our revenues grew at a compound annual growth rate of approximately 24.4%.
Since our first year of operations in 1995, our annual revenues have gradually grown from approximately $240,000 to approximately $75.9 million in 2023, a compound annual growth rate of approximately 22.8%, and between 2018 and 2023, our revenues grew at a compound annual growth rate of approximately 25.8%.
We plan to expand sales and marketing tools and campaigns to promote the Company, including further expanding our inbound prospecting team, and enhancing our digital marketing efforts, including paid search advertising, social media platforms, such as Instagram, and other alternative marketing platforms. 7 o Demand Generation .
We plan to expand sales and marketing tools and campaigns to promote the Company, and enhancing our digital marketing efforts, including paid search advertising, search engine optimization (SEO), social media platforms, such as Instagram and LinkedIn, and other alternative marketing platforms. o Tradeshows and Events .
We also offer multiple procurement methods within the same platform. These include inventoried products, made-to-order products, and personalized products. Our approach is to utilize all three procurement methods within a single program to take advantage of the benefits each method offers. In addition to these three procurement models, Stran has developed strong factory direct relationships with factories around the globe.
Our approach is to utilize all three procurement methods within a single program to take advantage of the benefits each method offers. In addition to these three procurement models, Stran has developed strong factory direct relationships with factories around the globe. We utilize these relationships to help drive down costs for our clients.
Additionally, tax regulations in jurisdictions where we do not currently collect state or local taxes may subject us to the obligation to collect and remit such taxes, or to additional taxes, or to requirements intended to assist jurisdictions with their tax collection efforts. 15 The production, distribution and sale in the United States of many of our products are subject to the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, the Lanham Act, state consumer protection laws, competition laws, federal, state and local workplace health and safety laws, various federal, state and local environmental protection laws, various other federal, state and local statutes applicable to the production, transportation, sale, safety, advertising, labeling and ingredients of such products, and rules and regulations adopted pursuant to these laws.
The production, distribution and sale in the United States of many of our products are subject to the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, the Lanham Act, state consumer protection laws, competition laws, federal, state and local workplace health and safety laws, various federal, state and local environmental protection laws, various other federal, state and local statutes applicable to the production, transportation, sale, safety, advertising, labeling and ingredients of such products, and rules and regulations adopted pursuant to these laws.
We also plan to continue to identify and exhibit at appropriate tradeshows, conferences, and events where we have had success. ● Develop and Penetrate Customer Base . We plan to further expand and leverage our sales force and broad product and service offering to upsell and cross-sell to both develop new clients and further penetrate our existing customer base.
We plan to further expand and leverage our sales force and broad product and service offering to upsell and cross-sell to both develop new clients and further penetrate our existing customer base.
Alternatively, we do have inventory guarantees where the customer must purchase any inventory held by us that has been purchased on their behalf within the contractual time periods. Our active customers may be broken into two main categories, transactional clients and program clients. We have also been retained for some very large promotional campaigns.
Alternatively, we do have inventory guarantees where the customer must purchase any inventory held by us that has been purchased on their behalf within the contractual time periods. Our active customers may be broken into two main categories, transactional clients and program clients. During 2023, sales to our largest two customers were 13.2% and 7.8% of total revenue, respectively.
Stranberg was our sole stockholder then holding a total of 10,000,000 shares of our common stock. On the date of the reincorporation transaction, Mr. Stranberg transferred 3,400,000 shares of common stock to Andrew Shape, our Chief Executive Officer and President and director, and 800,000 shares of common stock to Randolph Birney, our Executive Vice President, pursuant to stock purchase agreements.
Stranberg transferred 3,400,000 shares of common stock to Andrew Shape, our Chief Executive Officer and President and director, and 800,000 shares of common stock to Randolph Birney, a former executive officer of the Company, pursuant to stock purchase agreements.
We have invested in sophisticated, efficient ordering and logistics technology that provides order processing, warehousing and fulfillment functions. We continue to invest in our technology infrastructure, including many customized solutions developed on Adobe Inc. (“Adobe”)’s open-source e-commerce platform, Magento Open Source.
We continue to invest in our technology infrastructure, including many customized solutions developed on Adobe Inc. (“Adobe”)’s open-source e-commerce platform, Magento Open Source.
The largest promotional products trade organizations are the Advertising Specialty Institute (ASI) and Promotional Products Association International (PPAI). U.S. Promotional Products is a Large and Growing Market According to ASI, the U.S. market for promotional products reached $25.8 billion in 2022, matching the previous high achieved in 2019 and growing 11.2% from 2021.
The largest promotional products trade organizations are the Advertising Specialty Institute (ASI) and Promotional Products Association International (PPAI). U.S. Promotional Products is a Large and Growing Market According to ASI, the market for promotional products sales reached a record high of $26.1 billion in 2023.
We have also invested in an internal commercial ERP software system, NetSuite ERP, which is expected to enhance the process of gathering and organizing the business data of our company through an integrated software suite, and is expected to be implemented in the first half of 2023. NetSuite combines accounting, order management, inventory, CRM, and presentation functionality.
We have also invested in an internal commercial ERP software system, NetSuite ERP, which is expected to enhance the process of gathering and organizing the business data of our company through an integrated software suite, and is expected to be implemented in the second half of 2024. Additional NetSuite phases will be planned and rolled out in subsequent years.
For inventoried products, we typically do not make the products live on the website until they have been received into inventory and are ready to be fulfilled. If there is an issue with an online store order regarding payment or checkout, the user can contact the appropriate client team who will help troubleshoot the issue or manually place the order.
For inventoried products, we typically do not make the products live on the website until they have been received into inventory and are ready to be fulfilled. If there is an issue with an online store, we have dedicated account-specific customer service teams who support all aspects of order fulfillment that the user can contact to help resolve.
As a result, we gained approximately over 1,400 customer accounts, including over 120 customer programs with higher repeat-business potential; 20 additional employees; inventory worth approximately $650,000 with a majority covered by contractual customer purchase guarantees; and additional revenues of over $10 million as of 2019.
In September 2020, we acquired all the customer account managers and customer accounts of the promotional products business Wildman Imprints in Warsaw, Indiana. As a result, we gained approximately over 1,400 customer accounts, including over 120 customer programs with higher repeat-business potential; 20 additional employees; inventory worth approximately $650,000; and additional revenues of over $10 million as of 2019.
In January 2023, we entered into a definitive agreement to acquire the promotional products business and assets of Massachusetts-based TRM Corp. We continue to explore and pursue additional acquisition opportunities that are appropriate. Please see “— Growth Strategies – Selectively Pursue Acquisitions ” below for a discussion of our asset acquisition experience and strategy.
We continue to explore and pursue additional acquisition opportunities that are appropriate. Please see “— Growth Strategies – Selectively Pursue Acquisitions ” below for a discussion of our asset acquisition experience and strategy. Growth Strategies The key elements of our strategy to grow our business include: ● Selectively Pursue Acquisitions .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeGeneral Risk Factors Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.
Biggest changeAssuming that the SEC climate disclosure rules are ultimately upheld in their present form, and even in light of the exemptions and accommodations made for smaller reporting companies and emerging growth companies described above, the costs to adopt the necessary disclosure controls and procedures to disclose all required information, the potential costs to make changes in our operations to allow us to improve our climate change-related disclosures, or the potential loss of revenues from these disclosure requirements due to investor, customer, or vendor requirements to disclose and meet certain climate change-related targets pursuant to these disclosure rules, may still have a material adverse effect on our business and operations. 26 General Risk Factors Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.
We do not expect to declare or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our business.
We do not expect to declare or pay dividends in the foreseeable future. We do not expect to declare or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our business.
See also above, “— We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies and our stockholders could receive less information than they might expect to receive from more mature public companies. ” We are a “smaller reporting company” within the meaning of the Exchange Act, and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
See also above, “— We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies and our stockholders could receive less information than they might expect to receive from more mature public companies. ” 34 We are a “smaller reporting company” within the meaning of the Exchange Act, and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We face the risk of our competition following a strategy of selling its products at or below cost in order to cover some amount of fixed costs, especially in stressed economic times. Global, national or regional economic slowdowns, high unemployment levels, fewer jobs, changes in tax laws or cost increases might have an adverse effect on our operating results.
We face the risk of our competition following a strategy of selling its products at or below cost in order to cover some amount of fixed costs, especially in stressed economic times. 23 Global, national or regional economic slowdowns, high unemployment levels, fewer jobs, changes in tax laws or cost increases might have an adverse effect on our operating results.
We face intense competition within our industry and our revenue and/or profits may decrease if we are not able to respond to this competition effectively. Customers in the promotional products, uniforms, tradeshow and event marketplace, loyalty and program management business process outsourcing industries choose distributors primarily based upon the quality, price and breadth of products and services offered.
We face intense competition within our industry and our revenue and/or profits may decrease if we are not able to respond to this competition effectively. Customers in the promotional products, tradeshow and event marketplace, loyalty and program management business process outsourcing industries choose distributors primarily based upon the quality, price and breadth of products and services offered.
We cannot predict if investors will find our securities less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our securities. 37 As a non-accelerated filer, we are not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act.
We cannot predict if investors will find our securities less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our securities. As a non-accelerated filer, we are not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act.
Furthermore, we might be forced to limit the features available in our current or future products. These delays and feature limitations, if they occur, could harm our business, results of operations and financial condition. 23 Failure to comply with data privacy and security laws and regulations could adversely affect our operating results and business.
Furthermore, we might be forced to limit the features available in our current or future products. These delays and feature limitations, if they occur, could harm our business, results of operations and financial condition. Failure to comply with data privacy and security laws and regulations could adversely affect our operating results and business.
This potential dependency could threaten the sustainability of our growth and have a material adverse effect on our financial condition or results of operations if we are unable to retain such major contracts or replace them with similarly major contracts on a regular basis. Our business incurs significant freight and transportation costs.
This potential dependency could threaten the sustainability of our growth and have a material adverse effect on our financial condition or results of operations if we are unable to retain such major contracts or replace them with similarly major contracts on a regular basis. 22 Our business incurs significant freight and transportation costs.
We are subject to periodic litigation in both domestic and international jurisdictions that may adversely affect our financial position and results of operations. From time to time we may be involved in legal or regulatory actions regarding product liability, employment practices, intellectual property infringement, bankruptcies and other litigation or enforcement matters.
We may be subject to periodic litigation in both domestic and international jurisdictions that may adversely affect our financial position and results of operations. From time to time we may be involved in legal or regulatory actions regarding product liability, employment practices, intellectual property infringement, bankruptcies and other litigation or enforcement matters.
While the Company has various cost control measures in place and employs an outside consultant to review on larger claims, employee health benefits have been and are expected to continue to be a significant cost to the Company. Medical costs will continue to be a significant expense to the Company and may increase due to factors outside the Company’s control.
While the Company has various cost control measures in place and employs an outside consultant to review larger claims, employee health benefits have been and are expected to continue to be a significant cost to the Company. Medical costs will continue to be a significant expense to the Company and may increase due to factors outside the Company’s control.
Failure to comply with such laws and regulations may expose us to potential liability and have an adverse effect on our results of operations. Implementation of technology initiatives could disrupt our operations in the near term and fail to provide the anticipated benefits.
Failure to comply with such laws and regulations may expose us to potential liability and have an adverse effect on our results of operations. 21 Implementation of technology initiatives could disrupt our operations in the near term and fail to provide the anticipated benefits.
The apparel industry, including uniforms and corporate identity apparel for promotional products, is subject to shifting customer demands and evolving fashion trends and our success is also dependent upon our ability to anticipate and promptly respond to these changes.
The apparel industry, including corporate identity apparel for promotional products, is subject to shifting customer demands and evolving fashion trends and our success is also dependent upon our ability to anticipate and promptly respond to these changes.
While we continue to evaluate our internal controls, we cannot be certain that these measures will ensure that we implement and maintain adequate internal control over financial reporting in the future.
While we continue to evaluate our internal control over financial reporting, we cannot be certain that these measures will ensure that we implement and maintain adequate internal control over financial reporting in the future.
Further, our suppliers generally source or manufacture finished goods in parts of the world that may be affected by economic uncertainty, political unrest, labor disputes, health emergencies, or the imposition of duties, tariffs or other import regulations by the United States. 21 Increases in the price of merchandise and raw materials used to manufacture our products could materially increase our costs and decrease our profitability.
Further, our suppliers generally source or manufacture finished goods in parts of the world that may be affected by economic uncertainty, political unrest, labor disputes, health emergencies, or the imposition of duties, tariffs or other import regulations by the United States. 18 Increases in the price of merchandise and raw materials used to manufacture our products could materially increase our costs and decrease our profitability.
As a distributor, we buy merchandise both from multiple supply sources and from a network of factories in which we have developed direct relationships around the globe over the past 27 years. However, an unexpected interruption in any of the sources or facilities may temporarily adversely affect our results of operations until alternate sources or facilities can be secured.
As a distributor, we buy merchandise both from multiple supply sources and from a network of factories in which we have developed direct relationships around the globe over the past 28 years. However, an unexpected interruption in any of the sources or facilities may temporarily adversely affect our results of operations until alternate sources or facilities can be secured.
In addition, we may have liabilities or obligations in the future if we discover any environmental contamination or liability at any of our facilities, or at facilities we may acquire. 32 If we are unable to accurately predict our future tax liabilities, become subject to increased levels of taxation or our tax contingencies are unfavorably resolved, our results of operations and financial condition could be adversely affected.
In addition, we may have liabilities or obligations in the future if we discover any environmental contamination or liability at any of our facilities, or at facilities we may acquire. 29 If we are unable to accurately predict our future tax liabilities, become subject to increased levels of taxation or our tax contingencies are unfavorably resolved, our results of operations and financial condition could be adversely affected.
These proceedings could cause us to incur costs and may require us to devote resources to defend against these claims and could ultimately result in a loss or other remedies, such as product recalls, which could adversely affect our financial position and results of operations. 31 Volatility in the global financial markets could adversely affect results.
These proceedings could cause us to incur costs and may require us to devote resources to defend against these claims and could ultimately result in a loss or other remedies, such as product recalls, which could adversely affect our financial position and results of operations. 28 Volatility in the global financial markets could adversely affect results.
During the years ended December 31, 2021 and 2022, many promotional products companies saw increases in the cost of finished goods and raw materials purchased, as well as in the average cost of finished goods and raw materials purchased, as compared to the prior year, driven by rising inflation rates and challenges in the supply chain which continue to persist.
During the years ended December 31, 2023 and 2022, many promotional products companies saw increases in the cost of finished goods and raw materials purchased, as well as in the average cost of finished goods and raw materials purchased, as compared to the prior year, driven by rising inflation rates and challenges in the supply chain which continue to persist.
Although we are not a borrower under or party to any material letter of credit or any other such instruments with SVB, Signature or any other financial institution currently in receivership, if we enter into any such instruments and any of our lenders or counterparties to such instruments were to be placed into receivership, we may be unable to access such funds.
Although we are not a borrower under or party to any material letter of credit or any other such instruments with any financial institution currently in receivership, if we enter into any such instruments and any of our lenders or counterparties to such instruments were to be placed into receivership, we may be unable to access such funds.
If we fail to maintain the adequacy of our internal controls or if we or our independent registered public accounting firm were to discover material weaknesses in our internal controls, as such standards are modified, supplemented or amended, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act.
If we fail to maintain the adequacy of our internal control over financial reporting or if we or our independent registered public accounting firm were to discover material weaknesses in our internal control over financial reporting, as such standards are modified, supplemented or amended, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).
As cyber-attacks become more frequent, sophisticated, damaging and difficult to predict, any such event could negatively impact our business operations, such as by product disruptions that result in an unexpected delay in operations, interruptions in our ability to deliver products and services to our customers, loss of confidential or otherwise protected information, corruption of data and expenses related to the repair or replacement of our information technology systems.
As cyberattacks become more frequent, sophisticated, damaging and difficult to predict, any such event could negatively impact our business operations, such as by product disruptions that result in an unexpected delay in operations, interruptions in our ability to deliver products and services to our customers, loss of confidential or otherwise protected information, corruption of data and expenses related to the repair or replacement of our information technology systems.
On February 23, 2022, we announced that our board of directors had authorized a stock repurchase program under which we may repurchase up to $10 million of our outstanding shares of common stock in the open market, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended (“Rule 10b-18”) .
On February 23, 2022, we announced that our board of directors had authorized a stock repurchase program under which we may repurchase up to $10 million of our outstanding shares of common stock in the open market, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act (“Rule 10b-18”) .
These changes are partially driven by interruptions in global supply chains (including as a result of port congestion and trucking shortages) and partially by a shift in customer buying habits to e-commerce, which has the effect of increasing demand for shipping capacity from Asia, leading to capacity constraints.
These changes are partially driven by interruptions in global supply chains (including as a result of port congestion, canal blockages and disruptions, and trucking shortages) and partially by a shift in customer buying habits to e-commerce, which has the effect of increasing demand for shipping capacity from Asia, leading to capacity constraints.
For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not emerging growth companies, including but not limited to: ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; ● being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and ● being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not emerging growth companies, including but not limited to: ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; ● being exempt from certain greenhouse gas emissions disclosure and related third-party assurance requirements; ● being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and ● being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
If our securities become subject to the penny stock rules, it would become more difficult to trade our shares. The Securities and Exchange Commission, or the SEC, has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.
If our securities become subject to the penny stock rules, it would become more difficult to trade our shares. The Securities and Exchange Commission (the “SEC”) has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.
The measures we have in place to monitor and protect our information technology systems might not provide sufficient protection from catastrophic events, power surges, viruses, malicious software (including ransomware), attempts to gain unauthorized access to data or other types of cyber-based attacks.
The measures we have in place to monitor and protect our information technology systems might not provide sufficient protection from catastrophic events, power surges, viruses, malicious software (including ransomware), attempts to gain unauthorized access to data or other types of cyberattacks.
We are unable to predict the likely duration and severity of any disruption in financial markets and adverse economic conditions and the effects they may have on our business and financial condition. Failure to achieve and maintain effective internal controls could adversely affect our business and price of our securities.
We are unable to predict the likely duration and severity of any disruption in financial markets and adverse economic conditions and the effects they may have on our business and financial condition. Failure to achieve and maintain effective internal control over financial reporting could adversely affect our business and price of our securities.
Effective internal controls are necessary for us to provide reliable financial reports. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to the consolidated financial statement preparation and presentation.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to the consolidated financial statement preparation and presentation.
Riley to repurchase shares of common stock of the Company for the Company’s account in accordance with Rule 10b-18 and the Company’s instructions. Repurchases under the Trading Plan are scheduled to terminate as late as May 2023.
Riley to repurchase shares of common stock of the Company for the Company’s account in accordance with Rule 10b-18 and the Company’s instructions. Repurchases under the Trading Plan are scheduled to terminate as late as June 2024.
In addition, the market prices of our securities may fluctuate significantly in response to several factors, most of which we cannot control, including: ● actual or anticipated variations in our periodic operating results; ● increases in market interest rates that lead investors of our common stock and publicly-traded warrants to demand a higher investment return; ● changes in earnings estimates; ● changes in market valuations of similar companies; ● actions or announcements by our competitors; ● adverse market reaction to any increased indebtedness we may incur in the future; ● additions or departures of key personnel; ● actions by stockholders; ● speculation in the media, online forums, or investment community; and ● our intentions and ability to maintain the listing of our common stock and publicly-traded warrants on Nasdaq. 33 Volatility in the market prices of our securities may prevent investors from being able to sell their securities at or above their purchase price.
In addition, the market prices of our securities may fluctuate significantly in response to several factors, most of which we cannot control, including: ● actual or anticipated variations in our periodic operating results; ● increases in market interest rates that lead investors of our common stock and publicly-traded warrants to demand a higher investment return; ● changes in earnings estimates; ● changes in market valuations of similar companies; ● actions or announcements by our competitors; ● adverse market reaction to any increased indebtedness we may incur in the future; ● additions or departures of key personnel; ● actions by stockholders; ● speculation in the media, online forums, or investment community; and ● our intentions and ability to maintain the listing of our common stock and publicly-traded warrants on Nasdaq.
Costs to employ drivers have increased and transportation shortages have become more prevalent.
Costs to employ drivers have increased and transportation disruptions have become more prevalent.
Other state laws, such as the California Consumer Privacy Act, as amended (“CCPA”), among other things, contain disclosure obligations for businesses that collect personal information about residents in their state and affords those individuals new rights relating to their personal information that may affect our ability to collect and/or use personal information.
Other state laws, such as the CCPA, among other things, contain disclosure obligations for businesses that collect personal information about residents in their state and affords those individuals new rights relating to their personal information that may affect our ability to collect and/or use personal information.
The inability to collect on sales to significant customers or a group of customers could have a material adverse effect on our results of operations. 25 There is a risk of dependence on one or a group of customers or market expectations of unsustainable growth.
The inability to collect on sales to significant customers or a group of customers could have a material adverse effect on our results of operations. There is a risk of dependence on one or a group of customers.
As such, our officers and directors together hold almost a majority of our outstanding shares of common stock and therefore may effectively control our operations. The reduction of total outstanding shares through the execution of a stock repurchase program of common stock may increase the risk that Mr.
As such, our officers and directors together hold a significant percentage of our outstanding shares of common stock and therefore may effectively control our operations. The reduction of total outstanding shares through the execution of a stock repurchase program of common stock may increase the risk that Mr. Stranberg or Mr.
For example, our corporate headquarters is located in Massachusetts, which does have earthquakes and experiences other less frequent natural hazards such as flooding, coastal erosion and an occasional nuisance landslide; should any of these unforeseen or catastrophic events occur, the possibly resulting infrastructure damage and disruption to the area could negatively affect our company, such as by damage to or total destruction of our headquarters, surrounding transportation infrastructure, network communications and other forms of communication.
For example, our corporate headquarters is located in Massachusetts, which experiences natural hazards such as flooding and coastal erosion; should any unforeseen or catastrophic events occur, the possibly resulting infrastructure damage and disruption to the area could negatively affect our company, such as by damage to or total destruction of our headquarters, surrounding transportation infrastructure, network communications and other forms of communication.
Furthermore, a controlling stockholder or group of stockholders may take actions with which other stockholders do not agree, including actions that delay, defer or prevent a change of control of the Company and that could cause the price that investors are willing to pay for the Company’s stock to decline. 35 We do not expect to declare or pay dividends in the foreseeable future.
Furthermore, a controlling stockholder or group of stockholders may take actions with which other stockholders do not agree, including actions that delay, defer or prevent a change of control of the Company and that could cause the price that investors are willing to pay for the Company’s stock to decline.
A controlling stockholder or group of stockholders has significant influence over, and may have the ability to control, matters requiring approval by our stockholders, including the election of directors and approval of mergers, consolidations, sales of assets, recapitalizations and amendments to our articles of incorporation.
Shape alone or that our officers and directors together will be controlling stockholders. A controlling stockholder or group of stockholders has significant influence over, and may have the ability to control, matters requiring approval by our stockholders, including the election of directors and approval of mergers, consolidations, sales of assets, recapitalizations and amendments to our articles of incorporation.
We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements, on the price of our securities. In all events, future issuances of our securities would result in the dilution of your holdings.
We cannot predict the effect, if any, of future issuances of our securities on the price of our securities. In all events, future issuances of our securities would result in the dilution of your holdings.
We have evaluated, and may continue to evaluate, potential acquisition transactions. We attempt to address the potential risks inherent in assessing the attractiveness of acquisition candidates, as well as other challenges such as retaining the employees and integrating the operations of the businesses we acquire.
We attempt to address the potential risks inherent in assessing the attractiveness of acquisition candidates, as well as other challenges such as retaining the employees and integrating the operations of the businesses we acquire.
For example, on March 10, 2023, Silicon Valley Bank (“SVB”), was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (the “FDIC”), as receiver. Similarly, on March 12, 2023, Signature Bank Corp. (“Signature”), and Silvergate Capital Corp. were each swept into receivership.
For example, on March 10, 2023, Silicon Valley Bank (“SVB”), was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (the “FDIC”), as receiver. Similarly, on March 12, 2023, Signature Bank Corp.
The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. The number and sophistication of attempted attacks and intrusions that companies have experienced from third parties has increased over the past few years. Despite our security measures, it is impossible for us to eliminate this risk.
The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. The number and sophistication of attempted attacks and intrusions that companies have experienced from third parties has increased over the past few years.
A significant adverse change in a customer relationship or in a customer’s financial position could cause us to limit or discontinue business with that customer, require us to assume more credit risk relating to that customer’s receivables or limit our ability to collect amounts related to previous purchases by that customer, all of which could have a material adverse effect on our business, results of operations or financial condition. 22 We may be unable to identify or to complete acquisitions or to successfully integrate the businesses we acquire.
A significant adverse change in a customer relationship or in a customer’s financial position could cause us to limit or discontinue business with that customer, require us to assume more credit risk relating to that customer’s receivables or limit our ability to collect amounts related to previous purchases by that customer, all of which could have a material adverse effect on our business, results of operations or financial condition.
Although no single stockholder or group of stockholders currently owns a majority of our shares, as of March 27, 2023, our Chairman, Andrew Stranberg, beneficially owned approximately 28.6% shares of our common stock, our President and Chief Executive Officer, Andrew Shape, beneficially owned approximately 19.2% shares of our common stock, and our Executive Vice President, Randolph Birney, beneficially owned approximately 4.5% shares of our common stock.
Although no single stockholder or group of stockholders currently owns a majority of our shares, as of March 28, 2024, Andrew Stranberg, our Executive Chairman, beneficially owned approximately 28.7% shares of our common stock, and Andrew Shape, our President and Chief Executive Officer, beneficially owned approximately 19.2% shares of our common stock.
Moreover, on January 28, 2022, the California Attorney General announced that certain consumer loyalty programs are subject to the CCPA, which may affect some of our customers who use our loyalty program services if they are found not to comply with the CCPA’s requirements.
Moreover, on January 28, 2022, the California Attorney General announced that certain consumer loyalty programs are subject to the CCPA, which may affect some of our customers who use our loyalty program services if they are found not to comply with the CCPA’s requirements. The CDPA also establishes rights for Virginia consumers to control how companies use individuals’ personal data.
The Virginia Consumer Data Protection Act (“CDPA”) also establishes rights for Virginia consumers to control how companies use individuals’ personal data. The CDPA dictates how companies must protect personal data in their possession and respond to consumers exercising their rights, as prescribed by the law, regarding such personal data. The CDPA went into effect on January 1, 2023.
The CDPA dictates how companies must protect personal data in their possession and respond to consumers exercising their rights, as prescribed by the law, regarding such personal data. The CDPA went into effect on January 1, 2023.
If we are not able to negotiate acceptable pricing and other terms with these vendors or they experience performance problems or other difficulties, such as the increased volume of deliveries due to shelter-in-place orders associated with the COVID-19 pandemic, it could negatively impact our business and results of operations and negatively affect the experiences of our customers, which could affect the degree to which they continue to do business with us.
If we are not able to negotiate acceptable pricing and other terms with these vendors or they experience performance problems or other difficulties, it could negatively impact our business and results of operations and negatively affect the experiences of our customers, which could affect the degree to which they continue to do business with us.
Our success is largely dependent on the skills, experience and efforts of our senior management and other key personnel, such as our Chief Executive Officer and President, Andrew Shape, our Executive Chairman, Andrew Stranberg, our Executive Vice President, Randolph Birney, our Chief Financial Officer, David Browner, our Chief of Staff, Stephen Paradiso, our Chief Technology Officer, Jason Nolley, our Chief Operating Officer, Sheila Johnshoy, and our Vice President of Growth and Strategic Initiatives, John Audibert.
Our success is largely dependent on the skills, experience and efforts of our senior management and other key personnel, including Andrew Shape, our Chief Executive Officer and President, Andrew Stranberg, our Executive Chairman, David Browner, our Chief Financial Officer, Sheila Johnshoy, our Chief Operating Officer, Ian Wall, our Chief Information Officer, and John Audibert, our Vice President of Growth and Strategic Initiatives.
Disruption to delivery services due to inclement weather could result in delays that could adversely affect our reputation, business and results of operations.
Disruption to delivery services due to inclement weather, climate change, or political instability, among other causes, could result in delays that could adversely affect our reputation, business and results of operations.
A number of U.S. states have enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal information, such as social security numbers, financial information and other sensitive personal information.
Despite our security measures, it is impossible for us to eliminate this risk. 20 A number of U.S. states have enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal information, such as social security numbers, financial information and other sensitive personal information.
Our articles of incorporation authorize us to issue up to 50,000,000 shares of blank check preferred stock. Any preferred stock that we issue in the future may rank ahead of our securities in terms of dividend priority or liquidation premiums and may have greater voting rights than our securities.
Any preferred stock that we issue in the future may rank ahead of our securities in terms of dividend priority or liquidation premiums and may have greater voting rights than our securities.
Any of these events could materially adversely affect our business, financial condition, results of operations and cash flows. Shortages of supply of merchandise from suppliers, interruptions in our manufacturing, and local conditions in the countries in which we source goods and materials could adversely affect our results of operations.
Risks Related to Our Business and Industry Shortages of supply of merchandise from suppliers, interruptions in our manufacturing, and local conditions in the countries in which we source goods and materials could adversely affect our results of operations.
Holders of our securities must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our securities. 36 We are authorized to issue “blank check” preferred stock without stockholder approval, which could adversely impact the rights of holders of our securities.
Holders of our securities must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our securities.
Even if we are able to acquire businesses on favorable terms, managing growth through acquisition is a difficult process that includes integration and training of personnel, combining facility and operating procedures, and additional matters related to the integration of acquired businesses within our existing organization.
If our estimates or assumptions to value the acquired assets and liabilities are not accurate, we may be exposed to losses, and/or unexpected usage of cash flow to fund the operations of the acquired operations that may be material. 19 Even if we are able to acquire businesses on favorable terms, managing growth through acquisition is a difficult process that includes integration and training of personnel, combining facility and operating procedures, and additional matters related to the integration of acquired businesses within our existing organization.
We monitor our credit risk exposure by periodically obtaining credit reports and updated financials on our customers. We generally see a heightened amount of bankruptcies by our customers during economic downturns and financial crises. We also believe that the COVID-19 pandemic, and its impact on our customers, could have a negative impact on our collection efforts.
We monitor our credit risk exposure by periodically obtaining credit reports and updated financials on our customers. We generally see a heightened amount of bankruptcies by our customers during economic downturns and financial crises.
Effective January 1, 2023, we also became subject to the California Privacy Rights Act, which expands upon the consumer data use restrictions, penalties and enforcement provisions under the California Consumer Privacy Act.
Effective January 1, 2023, we also became subject to the CPRA, which expands upon the consumer data use restrictions, penalties and enforcement provisions under the California Consumer Privacy Act. Effective July 1, 2023, we also became subject to the Colorado Privacy Act and Connecticut’s An Act Concerning Personal Data Privacy and Online Monitoring, which are also comprehensive consumer privacy laws.
Our revenues are impacted by our customers’ opening and closing of locations and reductions and increases in headcount, including from voluntary turnover and increased automation, which affect the quantity of uniform orders on a per-employee basis.
Our revenues are impacted by our customers’ opening and closing of locations and reductions and increases in headcount, including from voluntary turnover and increased automation.
These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally. 30 The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations and our financial condition and results of operations.
The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations and our financial condition and results of operations.
Competitive and general economic conditions might limit our ability and that of our competitors to increase prices to cover any increases in our product cost. 27 The promotional products, uniforms, trade show and events marketplace, loyalty and program management business industries are subject to pricing pressures that may cause us to lower the prices we charge for our products and services that adversely affect our financial performance.
The promotional products, trade show and events marketplace, loyalty and program management business industries are subject to pricing pressures that may cause us to lower the prices we charge for our products and services that adversely affect our financial performance.
Further, in the event a court finds the exclusive forum provision contained in our warrant certificates to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our results of operations.
Further, in the event a court finds the exclusive forum provision contained in our warrant certificates to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our results of operations. 31 Risks Related to our Common Stock and Publicly-Traded Warrants Although we adopted a stock repurchase program, we have discretion to not repurchase your shares, to suspend the program, and to cease repurchases.
Failure to comply with U.S. and international data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business. 24 The Consumer Product Safety Improvement Act and other existing or future government regulation could harm our business or may cause us to incur additional costs associated with compliance.
Failure to comply with U.S. and international data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business.
The challenges in the supply chain, which include shipping and logistics issues, also delayed the arrival of product that many promotional products companies could sell; this challenge also persists. Our shipping costs for importing raw materials from overseas have increased significantly since the emergence of COVID-19.
The challenges in the supply chain, which include shipping and logistics issues, also delayed the arrival of product that many promotional products companies could sell; this challenge also persists.
If a company determines that it does not qualify for smaller reporting company status because it exceeded one or more of the above thresholds, it will remain unqualified unless when making its annual determination it meets certain alternative threshold requirements which will be lower than the above thresholds if its prior public float or prior annual revenues exceed certain thresholds. 38 As a smaller reporting company, we are not required to include a Compensation Discussion and Analysis section in our proxy statements; we may provide only two years of financial statements; and we need not provide the table of selected financial data.
If a company determines that it does not qualify for smaller reporting company status because it exceeded one or more of the above thresholds, it will remain unqualified unless when making its annual determination it meets certain alternative threshold requirements which will be lower than the above thresholds if its prior public float or prior annual revenues exceed certain thresholds.
We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies and our stockholders could receive less information than they might expect to receive from more mature public companies.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our securities, and therefore stockholders may have difficulty selling their securities. 33 We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies and our stockholders could receive less information than they might expect to receive from more mature public companies.
Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our securities to decline and would result in the dilution of your holdings.
In the event we are covered by new analysts, and one or more analyst downgrades our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our securities could be negatively affected. 32 Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our securities to decline and would result in the dilution of your holdings.
Notwithstanding the foregoing, these provisions of the warrant certificate will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. 34 Any person or entity purchasing or otherwise acquiring or holding or owning (or continuing to hold or own) any interest in any of our publicly-traded warrants shall be deemed to have notice of and consented to the foregoing provisions.
Notwithstanding the foregoing, these provisions of the warrant certificate will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum.
Disruptions to the global supply chain due to climate-related impacts or geopolitical events are possible and exist as external risk factors that the Company can respond to but not control. These events could limit the supply of key raw materials to the Company, or could have significant impacts to pricing.
These products include both natural and synthetic materials derived from plants, animal products, and organic and petroleum-based raw materials. Disruptions to the global supply chain due to climate-related impacts or geopolitical events are possible and exist as external risk factors that the Company can respond to but not control.
The apparel industry, including uniforms and corporate identity apparel, is subject to changing fashion trends and if we misjudge consumer preferences, the image of one or more of our brands may suffer and the demand for our products may decrease.
Any such quotas, duties, tariffs or restrictions could have a material adverse effect on our business, results of operations or financial condition. 24 The apparel industry, including corporate identity apparel, is subject to changing fashion trends and if we misjudge consumer preferences, the image of one or more of our brands may suffer and the demand for our products may decrease.
We cannot assure that third parties will not assert claims against us on any such basis or that we will be able to successfully resolve such claims. In addition, the laws of some foreign countries do not allow us to protect, defend or enforce our intellectual property rights to the same extent as the laws of the United States.
In addition, the laws of some foreign countries do not allow us to protect, defend or enforce our intellectual property rights to the same extent as the laws of the United States.
As a result, you may suffer a loss on your investment. We may not be able to maintain a listing of our common stock and publicly-traded warrants on Nasdaq. Although our common stock and publicly-traded warrants are listed on Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing.
Although our common stock and publicly-traded warrants are listed on Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing. If we violate Nasdaq’s listing requirements, or if we fail to meet any of Nasdaq’s listing standards, our common stock and publicly-traded warrants may be delisted.
Meanwhile, several other states and the federal government have considered or are considering privacy laws like the CCPA. We will continue to monitor and assess the impact of these laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
We will continue to monitor and assess the impact of these laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business. Outside of the U.S., data protection laws, including the GDPR, also might apply to some of our operations or business collaborators.
These risks include, but may not be limited to, the following: ● delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets; ● inability to enter into credit facilities or other working capital resources; ● potential or actual breach of contractual obligations that require us to maintain letters of credit or other credit support arrangements; or ● termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.
These risks include, but may not be limited to, the following: ● delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets; ● inability to enter into credit facilities or other working capital resources; ● potential or actual breach of contractual obligations that require us to maintain letters of credit or other credit support arrangements; or ● termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements. 27 In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.
If no additional securities industry analysts commence coverage of us or if we lose coverage from EF Hutton, the market price and market trading volume of our securities could be negatively affected.
We currently do not have any research coverage. We may never obtain new research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our securities could be negatively affected.
Although a statement by the Department of the Treasury, the Federal Reserve and the FDIC indicated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts, borrowers under credit agreements, letters of credit and certain other financial instruments with SVB, Signature or any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts thereunder.
(“Signature”), and Silvergate Capital Corp. were each swept into receivership A statement by the Department of the Treasury, the Federal Reserve and the FDIC indicated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts.
If we are unable to meet these expectations by finding new major customers or gain major new engagements from existing customers to replace these nonrecurring contracts, there may be material adverse effects on the price of our securities due to the reactions of disillusioned investors, negative media coverage, damage to our reputation, and other effects that may have a material adverse effect on our financial condition or results of operations.
If we are unable to retain our current customers or finding new major customers or gain major new engagements from existing customers to replace any nonrecurring contracts, there may be material adverse effects on our financial condition or results of operations.
Healthcare costs have risen significantly in recent years, and recent legislative and private sector initiatives regarding healthcare reform could result in significant changes to the U.S. healthcare system. Additionally, we believe the ongoing COVID-19 pandemic may result in temporary or permanent healthcare reform measures, would result in significant cost increases and other negative impacts to our business.
Healthcare costs have risen significantly in recent years, and recent legislative and private sector initiatives regarding healthcare reform could result in significant changes to the U.S. healthcare system.
Outside of the U.S., data protection laws, including the GDPR, also might apply to some of our operations or business collaborators. Legal requirements in these countries relating to the collection, storage, processing and transfer of personal data/information continue to evolve.
Legal requirements in these countries relating to the collection, storage, processing and transfer of personal data/information continue to evolve.
We are subject to extensive and changing federal, state and foreign laws and regulations establishing health and environmental quality standards, concerning, among other things, wastewater discharges, air emissions and solid waste disposal, and may be subject to liability or penalties for violations of those standards.
We are subject to extensive and changing federal, state and foreign laws and regulations establishing health and environmental quality standards, and may be subject to liability or penalties for violations of those standards. We may be subject to future liabilities or obligations as a result of new or more stringent interpretations of existing laws and regulations.
We may recognize impairment charges, which could adversely affect our financial condition and results of operations. We assess our goodwill, intangible assets and long-lived assets for impairment when required by GAAP. These accounting principles require that we record an impairment charge if circumstances indicate that the asset carrying values exceed their estimated fair values.
We may recognize impairment charges, which could adversely affect our financial condition and results of operations. We assess our goodwill, intangible assets and long-lived assets for impairment when required by generally accepted accounting principles in the United States (“U.S. GAAP”).
The estimated fair value of these assets is impacted by general economic conditions in the locations in which we operate.
These accounting principles require that we record an impairment charge if circumstances indicate that the asset carrying values exceed their estimated fair values. The estimated fair value of these assets is impacted by general economic conditions in the locations in which we operate.
If we violate Nasdaq’s listing requirements, or if we fail to meet any of Nasdaq’s listing standards, our common stock and publicly-traded warrants may be delisted. In addition, our board of directors may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing.
In addition, our board of directors may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe foregoing description of the lease agreement and amendment to the lease agreement is qualified in its entirety by reference to the full text of such agreements which are filed as Exhibit 10.3 and Exhibit 10.4 to this Annual Report, respectively, and which are incorporated herein by reference. We also lease satellite office space in Warsaw, Indiana; Mt.
Biggest changeThe foregoing description of the lease agreement and amendment to the lease agreement is qualified in its entirety by reference to the full text of such agreements which are filed as Exhibit 10.3 and Exhibit 10.4 to this Annual Report, respectively, and which are incorporated herein by reference.
ITEM 2. PROPERTIES. We are headquartered in Quincy, Massachusetts, where we occupy approximately 10,000 square feet of office space pursuant to a lease agreement, as amended, that is expected to expire on May 31, 2025. Our management team, client service team, marketing, operations, and sales team are all primarily based in this office.
ITEM 2. PROPERTIES. We are headquartered in Quincy, Massachusetts, where we occupy approximately 10,000 square feet of office space pursuant to a lease agreement, as amended, that will terminate on May 31, 2025. Our management team, client service team, marketing, operations, and sales team are all primarily based in this office.
Pleasant, South Carolina; and Tomball, Texas. Our aggregate rent payments for these facilities is $146,412 per year. Our employees also work remotely from 17 additional locations around the United States using other facilities. We believe that all our properties have been adequately maintained, are generally in good condition, and are suitable and adequate for our businesses.
Our aggregate rent payments for these facilities is $204,615 per year. Our employees also work remotely from 20 additional locations around the United States using other facilities. We believe that all our properties have been adequately maintained, are generally in good condition, and are suitable and adequate for our businesses.
Added
Under a lease agreement dated May 31, 2023 (the “Miller Lease Agreement”) with Miller Family Walpole LLC, as landlord (the “Miller Landlord”), for a warehouse facility in Walpole, Massachusetts, we will pay base rent of $179,550.00 in the first year of the lease and an increase of 2% per annum in each subsequent year.
Added
We may extend the term for an additional five years upon the same base rent terms upon 12 months’ notice. We will be responsible for all property and other taxes and expenses related to the facility except for maintenance of certain structural elements. The initial lease term commenced on June 1, 2023 and terminates on May 31, 2028.
Added
We may assign our rights to the lease and property at the facility as collateral to a lender. The Miller Landlord is also required to execute a landlord lien waiver and collateral access agreement upon request.
Added
The Miller Lease Agreement contains provisions for minimum insurance, mutual indemnification from certain claims relating to the Miller Lease Agreement, and customary default and related termination and remedy provisions.
Added
The foregoing description of the Miller Lease Agreement is qualified in its entirety by reference to the full text of the agreement, a copy of which is filed as Exhibit 10.37 to this Annual Report. We also lease satellite office space in Warsaw, Indiana; Mt. Pleasant, South Carolina; Walpole, Massachusetts; and Tomball, Texas.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not currently aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 39 PART II
Biggest changeWe are not currently aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change“Risk Factors—Risks Related to Our Common Stock and Publicly-Traded Warrants— We do not expect to declare or pay dividends in the foreseeable future .” Recent Sales of Unregistered Securities We did not sell any equity securities during the 2022 fiscal year that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the 2022 fiscal year, except as disclosed below.
Biggest change“Risk Factors—Risks Related to Our Common Stock and Publicly-Traded Warrants— We do not expect to declare or pay dividends in the foreseeable future .” Recent Sales of Unregistered Securities We did not sell any equity securities during the 2023 fiscal year that were not previously disclosed in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K that was filed during the 2023 fiscal year . 38 Purchases of Equity Securities The following table provides information about our repurchases of common stock during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1) October 1, 2023 – October 31, 2023 - $ - 1,797,159 $ 6,643,289 November 1, 2023 – November 30, 2023 4,505 $ 1.31 1,801,664 $ 6,637,399 December 1, 2023 – December 31, 2023 13,502 $ 1.47 1,815,166 $ 6,617,594 (1) For a description of the Company’s stock repurchase program, see Item 2.
We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends on our common stock in the near future.
Dividend Policy We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends on our common stock in the near future.
Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. ” Dividend Policy We have never declared or paid cash dividends on our common stock.
Securities Authorized for Issuance Under Equity Compensation Plans The information required by this Item regarding equity compensation plans is incorporated by reference to the information set forth in Item 12. “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters – Securities Authorized for Issuance Under Equity Compensation Plans ”.
Removed
Number of Holders of Our Common Stock As of March 27, 2023, t here were approximately 18,316,253 holders of record of our common stock. In computing the number of holders of record of our common stock, each broker-dealer and clearing corporation holding shares on behalf of its customers is counted as a single holder.
Added
Number of Holders of Our Common Stock As of March 28, 2024, there were approximately 66 holders of record of our common stock, which does not include holders whose shares are held in nominee or “street name” accounts through banks, brokers or other financial institutions.
Removed
Use of Proceeds from Registered Securities On November 12, 2021, under the Underwriting Agreement dated November 8, 2021 (the “Underwriting Agreement”), we completed the IPO, in which we sold 4,337,349 units, with each unit consisting of one share of common stock and a publicly-traded warrant to purchase one share of common stock, at a price to the public of $4.15 per unit, before underwriting discounts and commissions.
Added
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations. – Liquidity and Capital Resources – Stock Repurchase Program ”. ITEM 6. [RESERVED]
Removed
Initially, the common stock and publicly-traded warrants had been listed on the Nasdaq Capital Market tier of Nasdaq under the initial ticker symbols “STRN” and “STRNW”, respectively. Subsequently, we changed the ticker symbols of the shares and publicly-traded warrants to “SWAG” and “SWAGW”, respectively.
Removed
The publicly-traded warrants initially had an exercise price per share of $5.1875, equal to 125% of the IPO Price.
Removed
Due to our subsequent private placement of common stock and common stock purchase warrants at a purchase price of $4.97 for one share and 1.25 warrants combined, after attributing a warrant value of $0.125, the exercise price per share of the publicly-traded warrants was reduced to $4.81375 as of December 10, 2021.
Removed
The publicly-traded warrants were immediately exercisable and expire on the fifth anniversary of the original issuance date.
Removed
We also granted the underwriters a 45-day over-allotment option to purchase up to an additional 650,602 shares of common stock and/or publicly-traded warrants to purchase up to 650,602 shares of common stock at the IPO Price less the underwriting discounts, representing 15% of the units sold in the IPO.
Removed
At the closing of the IPO, EF Hutton as the representative of the underwriters fully exercised its over-allotment option to purchase an additional 650,602 shares of common stock and 650,602 publicly-traded warrants. Therefore, we sold 4,987,951 shares of common stock and 4,987,951 publicly-traded warrants for total gross proceeds of approximately $20.7 million.
Removed
In addition to the underwriter commissions, discounts and non-accountable expenses of approximately $1.8 million and other offering expenses of approximately $1.0 million, we agreed to grant warrants to EF Hutton as the representative of the underwriters or its designees to purchase a total of 149,639 shares of common stock at an exercise price of $5.1875 (the “Representative’s Warrants”).
Removed
The Representative’s Warrants are exercisable at any time and from time to time, in whole or in part, during the four-and-a-half-year period commencing May 12, 2022. After deducting underwriter commissions, discounts and non-accountable expenses of approximately $1.8 million and other offering expenses of approximately $1.0 million, we received net proceeds of approximately $17.9 million at the closing of the IPO.
Removed
Assuming the exercise of all of the publicly-traded warrants and the Representative’s Warrants, we would receive additional total proceeds of approximately $21.6 million.
Removed
As of December 31, 2022, we had received a total of approximately $3.2 million from the exercise of publicly-traded warrants for the purchase of a total of 659,456 shares of common stock at the adjusted exercise price per share of $4.81375. We have not received any proceeds from the exercise of the Representative’s Warrants.
Removed
The IPO was conducted pursuant to our Registration Statement on Form S-1 (File No. 333-260109), which was initially filed with the SEC on October 7, 2021 (the “IPO Registration Statement”), and became effective on November 8, 2021, and our Registration Statement on Form S-1 (File No. 333-260880), which was filed with the SEC pursuant to Rule 462(b) under the Securities Act, which was effective immediately upon filing on November 8, 2021 (the “462(b) Registration Statement”).
Removed
The IPO Registration Statement registered for sale units consisting of one share of common stock and a warrant to purchase one share of common stock with a maximum aggregate offering price of $17,250,000; the publicly-traded warrants included in the units; the common stock underlying the publicly-traded warrants included in the units with a maximum aggregate offering price of $17,250,000; the Representative’s Warrants; and shares of common stock underlying the Representative’s Warrants with a maximum aggregate offering price of $646,875.
Removed
The 462(b) Prospectus registered for sale additional units with a maximum aggregate offering price of $3,450,000; additional publicly-traded warrants included in the units; additional common stock underlying the publicly-traded warrants included in the units with a maximum aggregate offering price of $3,450,000; additional Representative’s Warrants; and additional shares of common stock underlying the Representative’s Warrants with a maximum aggregate offering price of $129,375.
Removed
All of the units registered for sale pursuant to the IPO Registration Statement and 462(b) Registration Statement were sold for aggregate gross proceeds of $20,700,000. As of March 27, 2023, publicly-traded warrants included in the units have been exercised to purchase shares of common stock for total gross proceeds of $3.2 million.
Removed
As of the date of this report, the Representative’s Warrants have not been exercised. 40 On June 10, 2022, a post-effective amendment to the IPO Registration Statement was filed to update its prospectus to include, among other things, the information contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 that was filed with the SEC on March 28, 2022 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 that was filed with the SEC on May 13, 2022 (the “Post-Effective Amendment to IPO Form S-1”).
Removed
The Post-Effective Amendment to IPO Form S-1 became effective on June 16, 2022.
Removed
Prospectus Supplement No. 1 to the prospectus relating to the Post-Effective Amendment to IPO Form S-1 was filed pursuant to Rule 424(b)(3) under the Securities Act with the SEC on July 21, 2022 to include the information set forth in our Current Reports on Form 8-K which were filed with the SEC on July 19, 2022 and July 21, 2022.
Removed
Prospectus Supplement No. 2 to the prospectus relating to the Post-Effective Amendment to IPO Form S-1 was filed pursuant to Rule 424(b)(3) under the Securities Act with the SEC on August 15, 2022 to include the information in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 which was filed with the SEC on August 15, 2022.
Removed
Prospectus Supplement No. 3 to the prospectus relating to the Post-Effective Amendment to IPO Form S-1 was filed pursuant to Rule 424(b)(3) under the Securities Act with the SEC on September 7, 2022 to include the information in our Current Report on Form 8-K which was filed with the SEC on September 7, 2022.
Removed
Prospectus Supplement No. 4 to the prospectus relating to the Post-Effective Amendment to IPO Form S-1 was filed pursuant to Rule 424(b)(3) under the Securities Act with the SEC on November 14, 2022 to include the information in our Quarterly Report on Form 10-Q which was filed with the SEC on November 14, 2022.
Removed
Prospectus Supplement No. 5 to the prospectus relating to the Post-Effective Amendment to IPO Form S-1 was filed pursuant to Rule 424(b)(3) under the Securities Act with the SEC on December 2, 2022 to include the information in our Current Report on Form 8-K which was filed with the SEC on December 2, 2022.
Removed
Prospectus Supplement No. 6 to the prospectus relating to the Post-Effective Amendment to IPO Form S-1 was filed pursuant to Rule 424(b)(3) under the Securities Act with the SEC on January 31, 2023 to include the information in our Current Report on Form 8-K which was filed with the SEC on January 31, 2023.
Removed
EF Hutton acted as lead book-running manager and the representative of the underwriters, and US Tiger Securities, Inc. acted as joint book-running manager.
Removed
Pursuant to the Underwriting Agreement, on November 8, 2021, we and our officers, directors and stockholders before the offering entered into lock-up agreements that prevented, subject to certain exceptions, selling or transferring any of our shares of capital stock of the Company for up to six months.
Removed
During 2021 and 2022, a stockholder who was subject to these and other lock-up provisions transferred all of its shares to another holder with the consent of our Executive Chairman Mr. Stranberg, EF Hutton as the representative of the underwriters of our initial public offering, and the Company, and processed by its transfer agent.
Removed
The lock-up agreements with EF Hutton expired on May 8, 2022.
Removed
The following is our reasonable estimate of the uses of the proceeds from the IPO from the date of the closing of the IPO on November 12, 2021, until December 31, 2022: ● None was used for construction of plant, building and facilities; ● None was used for the purchase and installation of machinery and equipment; ● None was used for purchases of real estate; ● $2.2 million was used for the acquisition of other businesses; ● $3.5 was used for the repayment of indebtedness; ● $9.2 million was used for working capital; and ● $3.0 million was used for temporary investments.
Removed
As of December 31, 2022, we had used the entirety of the proceeds of the IPO, not including amounts received or that may be received from exercises of publicly-traded warrants issued in connection with the IPO.
Removed
None of the proceeds of the IPO were used to make any direct or indirect payments to any of our directors or officers, any of their associates, any persons owning 10% or more of any class of our equity securities, or any of our affiliates, or any others. 41 There has not been, and we do not expect, any material change in the planned use of proceeds from the IPO as described in the Post-Effective Amendment to IPO Form S-1 and the related prospectus.
Removed
The foregoing description of certain terms of the Underwriting Agreement and the Representative’s Warrants is qualified in its entirety by reference to the full text of such documents which are filed hereto as Exhibit 10.23, Exhibit 10.24, Exhibit 10.25, Exhibit 10.26, and Exhibit 10.27 to this Annual Report, respectively, and which are incorporated herein by reference.
Removed
Pursuant to an asset purchase agreement between the Company and Peter Poser, an individual, dated as of November 29, 2022, the Company agreed to purchase certain assets of Premier NYC that was owned and operated by Mr. Poser for a combination of cash payments and equity. The assets were valued at $682,546.10 as of October 31, 2022.
Removed
The Company also agreed to assume certain liabilities estimated at $118,627.40 as of October 31, 2022. With respect to the cash portion of consideration, the Company agreed to pay Mr.
Removed
Poser $100,000 at closing; three annual installment payments of $60,000 on the first anniversary of the closing date, $40,000 on the second anniversary of the closing date, and $30,000 on the third anniversary of the closing date; and up to three annual earn out payments equal to 45% of trailing 12-month Gross Profit (as defined by the agreement) in excess of $350,000 on each of the three anniversaries following the closing date.
Removed
With respect to the equity portion of the consideration, the Company agreed to issue to Mr. Poser a number of shares of common stock equal to $25,000 divided by the daily volume-weighted average price of the Company’s common stock for the five trading days prior to the closing date subject to certain lock-up terms.
Removed
On the date of closing, December 16, 2022, the Company acquired the assets and assumed liabilities under the asset purchase agreement, made the initial required cash payment, and issued 19,935 shares of common stock to Mr. Poser. Pursuant to the lock-up terms under the asset purchase agreement and a separate lock-up agreement, Mr.
Removed
Poser agreed not to transfer the stock for a three-year period except for up to 1,661 shares per quarter subject to any limitations pursuant to any applicable laws, and certain other transfer exceptions. The shares will be issued according to applicable regulatory and compliance requirements.
Removed
The shares are restricted securities as defined in Rule 144 of the Securities Act and carry no registration rights that require or permit the filing of any registration statement in connection with their issuance.
Removed
The shares were issued and sold pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act and in reliance on similar exemptions under applicable state laws. 42 Purchases of Equity Securities The following table provides information about our repurchases of common stock during the three months ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1) October 1, 2022 – October 31, 2022 - $ - - $ 6,824,085 November 1, 2022 – November 30, 2022 - $ - - $ 6,824,085 December 1, 2022 – December 31, 2022 110,112 $ 1.33 110,112 $ 6,667,595 On February 23, 2022, the Company issued a press release that announced that the Company’s board of directors had authorized a stock repurchase program under which the Company may repurchase up to $10 million of its outstanding shares of common stock in the open market, in accordance with all applicable securities laws and regulations, including Rule 10b-18.
Removed
The Company’s decision to repurchase its shares, as well as the timing of such repurchases, will depend on a variety of factors that include ongoing assessments of the Company’s capital needs, market conditions and the price of the Company’s common stock, and other corporate considerations, as determined by management.
Removed
There is no defined number of shares to be repurchased over a specified timeframe through the life of the stock repurchase program. The repurchase authorization has no expiration date but may be suspended or discontinued at any time.
Removed
On May 23, 2022, the Company filed a current report on Form 8-K that announced that on May 20, 2022 the Company had established the Trading Plan with B. Riley intended to qualify under Rule 10b-18. The Trading Plan instructs B.
Removed
Riley to repurchase shares of common stock of the Company for the Company’s account in accordance with Rule 10b-18 and the Company’s instructions.
Removed
The Company’s insider trading policy generally permits insider purchases of the Company’s stock only during the period beginning on the second business day following the day of public release of our quarterly or annual earnings and ending on the last day of the then-current quarter. Repurchases under the Trading Plan are scheduled to terminate as late as May 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

99 edited+41 added−124 removed43 unchanged
Biggest change(cost) for Inventory (as defined in the TRM Purchase Agreement) that is on hand and owned by Seller as of the TRM Closing Date; (c) installment payments (the “TRM Installment Payments”) equal to (i) $400,000 on the first anniversary of the TRM Closing Date, (ii) $300,000 on the second anniversary of the TRM Closing Date, (iii) $200,000 on the third anniversary of the TRM Closing Date, and (iv) $200,000 on the fourth anniversary of the TRM Closing Date, with such TRM Installment Payments subject to adjustment for certain uncollected accounts receivable amounts outstanding after the first 12 months following the TRM Closing; and (d) four annual earnout payments (collectively, the “TRM Earn Out Payments”), each equal to (i) 45% of annual Gross Profit (as defined in the TRM Purchase Agreement) of TRM Corp. above $4,000,000 with respect to certain customers of TRM Corp. or primarily resulting from the efforts of TRM or certain employees or independent contractors of TRM Corp., plus (ii) 25% of the annual Gross Profit above $4,000,000 with respect to customers primarily resulting from the past or future efforts of the Company that are assigned to and primary responsibility of any employee or independent contractor of TRM Corp. as designated by the TRM Purchase Agreement, for the trailing 12-month period, as of the first, second, third, and fourth anniversary of the TRM Closing Date, with such TRM Earn Out Payments subject to adjustment as set forth in the TRM Purchase Agreement.
Biggest changePursuant to the T R Miller Purchase Agreement, the Company paid T R Miller $2,154,230.21 in cash, reflecting the purchase price of $1,000,000 as adjusted by a $1,123,071.82 working capital adjustment; no adjustment for indebtedness as of the date and time of the T R Miller Closing (the “T R Miller Closing Date”) that was not part of the Assumed Liabilities (as defined in the T R Miller Purchase Agreement); no separate amount for any Inventory (as defined in the T R Miller Purchase Agreement) that was on hand and owned by T R Miller as of the T R Miller Closing Date, as such amount was included in the working capital adjustment; and first and last month’s rent under the Miller Lease Agreement (as defined below) of $14,962.50 and $16,195.89, respectively. 50 Following the T R Miller Closing, the Company will make (a) installment payments equal to (i) $400,000 on the first anniversary of the T R Miller Closing Date, (ii) $300,000 on the second anniversary of the T R Miller Closing Date, (iii) $200,000 on the third anniversary of the T R Miller Closing Date, and (iv) $200,000 on the fourth anniversary of the T R Miller Closing Date, each such installment payment subject to adjustment for certain uncollected accounts receivable amounts outstanding after the first 12 months following the T R Miller Closing; and (b) four annual earn-out payments, each equal to (i) 45% of the annual Gross Profit (as defined in the T R Miller Purchase Agreement) of T R Miller above $4,000,000 with respect to certain customers of T R Miller or primarily resulting from the efforts of the Miller Stockholder or certain employees or independent contractors of T R Miller, plus (ii) 25% of the annual Gross Profit above $4,000,000 with respect to customers primarily resulting from the past or future efforts of the Company that are assigned to and primary responsibility of any employee or independent contractor of T R Miller as designated by the T R Miller Purchase Agreement, for the trailing 12-month period, as of the first, second, third, and fourth anniversary of the T R Miller Closing Date, each such Earn Out Payment subject to adjustment as set forth in the T R Miller Purchase Agreement.
In accordance with FASB ASC 805, the acquisition method of accounting has been applied and recognition of the assets acquired has been determined at fair value as of the acquisition date. All acquisition costs have been expensed as incurred. The consideration paid has been allocated to the assets acquired based on their estimated fair values at the acquisition date.
In accordance with FASB ASC 805, the acquisition method of accounting has been applied and recognition of the assets acquired has been determined at fair value as of the acquisition date. All acquisition costs have been expensed as incurred. The consideration paid has been allocated to the assets acquired based on their estimated fair values at the acquisition date.
For further information on all of our significant accounting policies, see the notes to our financial statements beginning on page F-1 of this Annual Report. Investments Our investments consist of U.S. treasury bills, corporate bonds, money market funds. We classify our investments as available-for-sale and record these investments at fair value.
For further information on all of our significant accounting policies, see the notes to our financial statements beginning on page F-1 of this Annual Report. Investments Our investments consist of U.S. treasury bills, corporate bonds, and money market funds. We classify our investments as available-for-sale and record these investments at fair value.
“Eligible Accounts” are defined as accounts that meet a number of requirements, including, unless otherwise approved by the Lender, being less than ninety (90) days from the date of invoice not subject to any prior assignment, claim, lien, or security interest, not subject to set-off, credit, allowance or adjustment by the account debtor, arose in the ordinary course of the Company’s business, not an intercompany obligation, not subject to notice of bankruptcy or insolvency of the account debtor, not owed by an account debtor whose principal place of business is outside the United States, not a government account, not be evidenced by promissory notes, and not one of the accounts owed by an account debtor 25% or more of whose accounts are 90 or more days past invoice date; or otherwise not deemed acceptable by the Lender in accordance with its normal credit policies.
“Eligible Accounts” are defined as accounts that meet a number of requirements, including, unless otherwise approved by the Lender, being less than 90 days from the date of invoice not subject to any prior assignment, claim, lien, or security interest, not subject to set-off, credit, allowance or adjustment by the account debtor, arose in the ordinary course of the Company’s business, not an intercompany obligation, not subject to notice of bankruptcy or insolvency of the account debtor, not owed by an account debtor whose principal place of business is outside the United States, not a government account, not be evidenced by promissory notes, and not one of the accounts owed by an account debtor 25% or more of whose accounts are 90 or more days past invoice date; or otherwise not deemed acceptable by the Lender in accordance with its normal credit policies.
State income taxes will fluctuate based annually on apportionment of sales by state. Discrete tax events may cause our effective rate to fluctuate on a quarterly basis. Certain events, including, for example, acquisitions and other business changes, which are difficult to predict, may also cause our effective tax rate to fluctuate.
State income taxes will fluctuate based annually on apportionment of sales by state. 43 Discrete tax events may cause our effective rate to fluctuate on a quarterly basis. Certain events, including, for example, acquisitions and other business changes, which are difficult to predict, may also cause our effective tax rate to fluctuate.
Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled “ Item 1A.
Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled Item 1A.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.07 billion or more, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the IPO, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.07 billion or more, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
We believe that our current levels of cash will be sufficient to meet our anticipated cash needs for our operations and cash payment obligations for both the 12 months ended December 31, 2023 and in the long-term beyond this period, including our anticipated costs associated with being a public reporting company.
We believe that our current levels of cash will be sufficient to meet our anticipated cash needs for our operations and cash payment obligations for both the 12 months ended December 31, 2024 and in the long-term beyond this period, including our anticipated costs associated with being a public reporting company.
Risk Factors” and “Introductory Notes – Note Regarding Forward-Looking Statements. ” Overview We are an outsourced marketing solutions provider that sells branded products to customers. We purchase products and branding through various third-party manufacturers and decorators and resell the finished goods to customers.
“Risk Factors” and “Introductory Notes – Note Regarding Forward-Looking Statements. ” Overview We are an outsourced marketing solutions provider that sells branded products to customers. We purchase products and branding through various third-party manufacturers and decorators and resell the finished goods to customers.
Principal Factors Affecting Our Financial Performance Our operating results are primarily affected by the following factors: ● our ability to acquire new customers or retain existing customers; ● our ability to offer competitive product pricing; ● our ability to broaden product offerings; ● industry demand and competition; ● our ability to leverage technology and use and develop efficient processes; ● our ability to attract and retain talented employees; and ● market conditions and our market position. 48 Results of Operations The following table sets forth key components of our results of operations during the years ended December 31, 2022 and 2021, both in dollars and as a percentage of our revenues.
Principal Factors Affecting Our Financial Performance Our operating results are primarily affected by the following factors: ● our ability to acquire new customers or retain existing customers; ● our ability to offer competitive product pricing; ● our ability to broaden product offerings; ● industry demand and competition; ● our ability to leverage technology and use and develop efficient processes; ● our ability to attract and retain talented employees; and ● market conditions and our market position. 41 Results of Operations The following table sets forth key components of our results of operations during the years ended December 31, 2023 and 2022, both in dollars and as a percentage of our revenues.
For 2022 and 2021, the Company recorded an income tax provision comprised substantially of a deferred tax asset in the form of an operating loss carryforward. No valuation allowance against the deferred tax asset was accounted for due to the indefinite life of the asset.
For 2023 and 2022, the Company recorded an income tax provision comprised substantially of a deferred tax asset in the form of an operating loss carryforward. No valuation allowance against the deferred tax asset was accounted for due to the indefinite life of the asset.
Investments with an original maturity of greater than three months at the date of purchase and less than one year from the date of the balance sheet are classified as short-term and those with maturities of more than one year from the date of the balance sheet are classified as long-term in the consolidated balance sheet.
Investments with an original maturity of greater than three months at the date of purchase and less than one year from the date of the balance sheet are classified as current and those with maturities of more than one year from the date of the balance sheet are classified as long-term in the consolidated balance sheet.
The aggregate purchase price was $2,937,222, as follows: Fair Value of Identifiable Assets Acquired: Inventory $ 649,433 Property and Equipment 34,099 Intangible - Customer List 2,253,690 Total $ 2,937,222 Consideration Paid: Cash 521,174 Note Payable - Wildman 162,358 Contingent Earn-Out Liability 2,253,690 Total $ 2,937,222 For further discussion see Note s I, L and M to our financial statements beginning on page F-1 of this Annual Report.
The aggregate purchase price was $2,937,222, as follows: Fair Value of Identifiable Assets Acquired: Inventory $ 649,433 Property and Equipment 34,099 Intangible - Customer List 2,253,690 Total $ 2,937,222 Consideration Paid: Cash 521,174 Note Payable - Wildman 162,358 Contingent Earn-Out Liability 2,253,690 Total $ 2,937,222 For further discussion see Notes J and M to our financial statements beginning on page F-1 of this Annual Report.
Under the Loan Agreement, the Company is required to continue its current business of outsourced marketing solutions, and, without the prior consent of the Lender, the Company may not acquire in whole or in part any other company or business and shall not engage in any other business or open any other locations.
Under the Line of Credit Agreement, the Company is required to continue its current business of outsourced marketing solutions, and, without the prior consent of the Lender, the Company may not acquire in whole or in part any other company or business and shall not engage in any other business or open any other locations.
In connection with the Loan Agreement, on November 22, 2021, the Company, the Lender and Harte Hanks Response Management/ Boston, Inc. (the “Warehouse Provider”), the lessor of certain warehouse facilities to the Company, executed a Warehouseman’s Waiver in favor of the Lender (the “Warehouseman’s Waiver”).
In connection with the Line of Credit Agreement, on November 22, 2021, the Company, the Lender and Harte Hanks Response Management/Boston, Inc. (the “Warehouse Provider”), the lessor of certain warehouse facilities to the Company, executed a Warehouseman’s Waiver in favor of the Lender (the “Warehouseman’s Waiver”).
G.A.P. Promotions Assets Acquisition On January 31, 2022, the Company closed on an asset purchase agreement, dated as of January 21, 2022, as amended on January 31, 2022, to acquire inventory, working capital, and a customer list from G.A.P. Promotions, or the G.A.P. Promotions Asset Purchase Agreement.
G.A.P. Promotions Assets Acquisition On January 31, 2022, the Company closed on an asset purchase agreement, dated as of January 21, 2022, as amended on January 31, 2022, to acquire inventory, working capital, and a customer list from G.A.P. Promotions (the “G.A.P. Promotions Asset Purchase Agreement”).
It does not include any inventory held on consignment or not otherwise owned by the Company; any inventory which has been returned by a customer or is damaged or subject to any legal encumbrances other than a first priority security interest held by the Company; any inventory which is not in the possession of the Company; any inventory which is held by the Company on property leased by the Company unless the Lender has received a Landlord’s Waiver and Consent from the lessor of such property satisfactory to the Lender; any inventory which is not located within the United States; any inventory which the Lender reasonably deems to be obsolete or non-marketable; and any inventory not subject to a first priority fully perfected lien held by the Lender.
It does not include any inventory held on consignment or not otherwise owned by the Company; any inventory which has been returned by a customer or is damaged or subject to any legal encumbrances other than a first priority security interest held by the Company; any inventory which is not in the possession of the Company; any inventory which is held by the Company on property leased by the Company unless the Lender has received a landlord lien waiver and collateral access agreement from the lessor of such property satisfactory to the Lender; any inventory which is not located within the United States; any inventory which the Lender reasonably deems to be obsolete or non-marketable; and any inventory not subject to a first priority fully perfected lien held by the Lender.
Under the Security Agreement and the other Loan Documents, the Company granted the Lender a first priority security interest in all of its assets, including both assets owned as of the date of the Loan and afterwards, as collateral for full repayment of the Loan.
Under the Security Agreement and the other Line of Credit Documents, the Company granted the Lender a first priority security interest in all of its assets, including both assets owned as of the date of the Line of Credit and afterwards, as collateral for full repayment of the Line of Credit.
The Company also may not incur any additional indebtedness, secured or unsecured, except in the ordinary course of business; make loans or advances to others or guarantee others’ obligations except for certain ordinary advances to employees or ordinary customer credit terms; make investments; acquire any business; make capital expenditures except in the ordinary course of business; sell any material assets except in the ordinary course of business; or grant any security interests or mortgages in its properties or assets.
The Company also may not, without the prior approval by the Lender, incur any additional indebtedness, secured or unsecured, except in the ordinary course of business; make loans or advances to others or guarantee others’ obligations except for certain ordinary advances to employees or ordinary customer credit terms; make investments; acquire any business; make capital expenditures except in the ordinary course of business; sell any material assets except in the ordinary course of business; or grant any security interests or mortgages in its properties or assets.
Upon default of the Loan, the Lender may accelerate repayment of the Loan, take possession of the Company’s assets, assign a receiver over the Company’s assets, and enforce other rights as to the Company’s assets as secured creditor.
Upon default of the Line of Credit, the Lender may accelerate repayment of the Line of Credit, take possession of the Company’s assets, assign a receiver over the Company’s assets, and enforce other rights as to the Company’s assets as secured creditor.
The Company must pay for all of the Lender’s reasonable legal fees and expenses incurred to enforce its rights under the Loan Documents.
The Company must pay for all of the Lender’s reasonable legal fees and expenses incurred to enforce its rights under the Line of Credit Documents.
Income tax provision for the year ended December 31, 2022 accounted for approximately 47.3% and 84.2% of earnings (loss) before income taxes of approximately $(1.5 million) and $0.1 million for the years ended December 31, 2022 and 2021, respectively.
Income tax provision for the years ended December 31, 2023 and 2022 accounted for 47.3% and 47.3% of earnings (loss) before income taxes of approximately $0.1 million and approximately $(1.5) million for the years ended December 31, 2023 and 2022, respectively.
The Line of Credit and Note are secured by a first priority security interest in all assets and property of the Company, as more fully described in the Security Agreement, also dated November 22, 2021, between the Lender and the Borrower (the “Security Agreement” and together with the Loan Agreement and the Note, the “Loan Documents”).
The Line of Credit and Note are secured by a first priority security interest in all assets and property of the Company, as provided in the Security Agreement, also dated November 22, 2021, between the Lender and the Borrower (the “Security Agreement” and together with the Line of Credit Agreement and the Note, the “Line of Credit Documents”), and as described below.
There is no defined number of shares to be repurchased over a specified timeframe through the life of the stock repurchase program. The repurchase authorization has no expiration date but may be suspended or discontinued at any time. It is expected that stock repurchases will be paid using existing and future cash generated by operations.
There is no defined number of shares to be repurchased over a specified timeframe through the life of the stock repurchase program. The repurchase authorization has no expiration date but may be suspended or discontinued at any time. Stock repurchases are paid using cash generated by operations.
The increase in the dollar amount of cost of purchases and freight was primarily due to an increase in sales of 48.5% from period to period. 49 Gross Profit Gross profit consists of sales less total costs of sales.
The increase in the dollar amount of cost of purchases and freight was primarily due to an increase in sales of 28.7% from period to period. Gross Profit Gross profit consists of sales less total costs of sales.
The August 2022 acquisition of the Trend Brand Solutions assets generated $1.1 million of sales for the year ended December 31, 2022 compared to no sales from such assets for the year ended December 31, 2021.
The August 2022 acquisition of the Trend Brand Solutions assets generated approximately $3.1 million of sales for the year ended December 31, 2023 compared to approximately $1.1 million from such assets for the year ended December 31, 2022.
Our sales increased 48.5% to $59.0 million for the year ended December 31, 2022, from $39.7 million for the year ended December 31, 2021. The increase was primarily due to higher spending from existing clients as well as business from new customers. Additionally, the acquisitions of the G.A.P.
Our sales increased 28.7% to approximately $75.9 million for the year ended December 31, 2023, from approximately $59.0 million for the year ended December 31, 2022. The increase was primarily due to higher spending from existing clients as well as business from new customers. Additionally, the acquisitions of the G.A.P.
The December 2022 acquisition of the Premier NYC assets generated no sales for the year ended December 31, 2022, compared to no sales from such assets for the year ended December 31, 2021.
The December 2022 acquisition of the Premier NYC assets generated approximately $1.1 million of sales for the year ended December 31, 2023, compared to no sales from such assets for the year ended December 31, 2022.
On May 23, 2022, we announced that we had established the Trading Plan with B. Riley intended to qualify under Rule 10b-18. The Trading Plan instructs B. Riley to repurchase shares of common stock for our account in accordance with Rule 10b-18 and our instructions. Repurchases under the Trading Plan are scheduled to terminate as late as May 2023.
In connection with our stock repurchase program, on May 23, 2022, we announced that we had established a trading plan with B. Riley intended to qualify under Rule 10b-18. In May 2023, we renewed the trading plan. The trading plan instructs B. Riley to repurchase shares of common stock for our account in accordance with Rule 10b-18 and our instructions.
The Loan is subject to interest at the prime rate plus 0.5% per annum. The Company must repay interest on Loan proceeds on a monthly basis. The Loan is expected to continue for 12 months, subject to the Lender’s demand rights and the Company’s ongoing affirmative and other obligations under the Loan Documents, as summarized below.
The Line of Credit is subject to interest at the prime rate plus 0.5% per annum. The Company must repay interest on Line of Credit proceeds on a monthly basis. The Line of Credit will continue indefinitely, subject to the Lender’s demand rights and the Company’s ongoing affirmative and other obligations under the Line of Credit Documents, as summarized below.
For so long as we are an emerging growth company, we will not be required to: ● have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; ● comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); ● submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and ● disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
For so long as we are an emerging growth company, we will not be required to: ● have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; ● present three years, and may instead present only two years, of audited financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this report; ● comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); ● comply with certain greenhouse gas emissions disclosure and related third-party assurance requirements; ● submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and ● disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
Less than 350 of our more than 2,000 active customers are considered to be program clients. Our active customers are any organizations, businesses, or divisions of a parent organization which have purchased directly or indirectly from us within the last two years, and include organizations that have bought from other organizations for which Stran acts as an established sub-contractor.
Our active customers are any organizations, businesses, or divisions of a parent organization which have purchased directly or indirectly from us within the last two years, and include organizations that have bought from other organizations for which Stran acts as an established sub-contractor.
Our decision to repurchase our shares, as well as the timing of such repurchases, will depend on a variety of factors that include ongoing assessments of our capital needs, market conditions and the price of our common stock, and other corporate considerations, as determined by management. Repurchases will also only be made in accordance with the Company’s insider trading policy.
Our decision to repurchase our shares, as well as the timing of such repurchases, will depend on a variety of factors that include ongoing assessments of our capital needs, market conditions and the price of our common stock, and other corporate considerations, as determined by management.
Promotions, assets in January 2022, the assets of Trend Brand Solutions in August 2022, and the assets of Premier NYC in December 2022.
Promotions in January 2022, the assets of Trend Brand Solutions in August 2022, the assets of Premier NYC in December 2022, and the assets of T R Miller in June 2023 .
Revenue Recognition In accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), we recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services.
The intangible assets are evaluated when a triggering event occurs, at least annually, for potential impairment. 52 Revenue Recognition In accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), we recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services.
The foregoing description of the Trend Asset Purchase Agreement and assets acquired from Trend Brand Solutions is qualified in their entirety by the full text of the asset purchase agreement and amendment thereto, which are filed as Exhibit 2.3 and Exhibit 2.4 to this Annual Report, respectively, and incorporated by reference herein.
The foregoing description of the G.A.P. Promotions Asset Purchase Agreement and assets acquired from G.A.P. Promotions is qualified in its entirety by the full text of the asset purchase agreement and amendment thereto, which are filed as Exhibit 2.1 and Exhibit 2.2 to this Annual Report, respectively, and incorporated by reference herein.
The timing and manner of the determination of the TRM Purchase Price and the working capital and TRM Earn Out Payments adjustments or payments, and the resolution of any disagreements as to such adjustments or payments, will follow the procedures prescribed by the TRM Purchase Agreement.
The timing and manner of the remaining working capital adjustments or payments and the earn-out payments, and the resolution of any disagreements as to such adjustments or payments, will follow the procedures provided by the T R Miller Purchase Agreement.
The decrease in net cash provided by financing activities for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily due to the repurchase of our common stock during the year ended December 31, 2022, offset by the exercise of our publicly-traded warrants.
The decrease in net cash used in financing activities for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily due to the non-recurrence of proceeds from the exercise of our publicly-traded warrants, offset by reduced repurchases of our common stock, during the year ended December 31, 2022.
Fair Value of Identifiable Assets Acquired: Cash $ 63,624 Accounts Receivable 346,822 Inventory 108,445 Fixed Assets 14,444 Intangible – Customer List 1,659,831 Total $ 2,193,166 Consideration Paid: Cash $ 1,488 Assumption of Liabilities 721,334 Restricted Stock 100,000 Contingent Earn-Out Liability 1,370,344 Total $ 2,193,166 For further discussion see Notes I and M to our f inancial statements beginning on page F-1 of this Annual Report, Item 1.01 of the Current Report on Form 8-K filed on July 19, 2022, and Items 1.01 and 2.01 of the Current Report on Form 8-K filed on September 7, 2022.
The aggregate purchase price was $2,193,166, as follows: Fair Value of Identifiable Assets Acquired: Cash $ 63,624 Accounts Receivable 346,822 Inventory 108,445 Fixed Assets 14,444 Intangible – Customer List 1,659,831 Total $ 2,193,166 Consideration Paid: Cash $ 1,488 Assumption of Liabilities 721,334 Restricted Stock 100,000 Contingent Earn-Out Liability 1,370,344 Total $ 2,193,166 For further discussion see Notes J and N to our financial statements beginning on page F-1 of this Annual Report.
The estimate of fair values for tangible assets acquired were agreed to by both buyer and seller. The aggregate purchase price was $2,193,166.
The estimate of fair values for tangible assets acquired was agreed to by both buyer and seller.
The estimate of fair values for tangible assets acquired were agreed to by both buyer and seller. The aggregate purchase price was $1,390,533.
The estimate of fair values for tangible assets acquired was agreed to by both buyer and seller.
The consideration paid has been allocated to the assets acquired based on their estimated fair values at the acquisition date. The estimate of fair values for tangible assets acquired were agreed to by both buyer and seller. The aggregate purchase price was $3,245,872.
All acquisition costs have been expensed as incurred. The consideration paid has been allocated to the assets acquired based on their estimated fair values at the acquisition date. The estimate of fair values for tangible assets acquired was agreed to by both buyer and seller.
For the year ended December 31, 2022, net cash used in financing activities consisted primarily of the repurchase of our common stock under our stock repurchase program offset by net proceeds received from the exercise of our publicly-traded warrants.
For the year ended December 31, 2022, net cash used in financing activities consisted primarily of payments related to a contingent earn-out liability of approximately $0.7 million and the repurchase of our common stock under our stock repurchase program for approximately $3.3 million, offset by net proceeds received from the exercise of our publicly-traded warrants of approximately $1.3 million.
Promotions assets in January 2022, the Trend Brand Solutions assets in August 2022, and the Premier NYC assets in December 2022 accounted for $6.5 million, or 11.0%, of sales, for 2022, compared to none for 2021, as described in more detail immediately below. The January 2022 acquisition of the G.A.P.
Promotions assets in January 2022, the Trend Brand Solutions assets in August 2022, the Premier NYC assets in December 2022, and the T R Miller assets in June 2023 accounted for approximately $14.7 million, or 19.4%, of sales, for 2023, compared to approximately $6.5 million, or 11.0%, of sales for 2022, as described in more detail immediately below.
Recent Developments T R Miller Asset Purchase Agreement On January 25, 2023, we entered into an Asset Purchase Agreement (the “TRM Purchase Agreement”) with TRM Corp., a Massachusetts corporation, and Thomas R.
T R Miller Asset Acquisition Agreement On January 25, 2023, we entered into an Asset Purchase Agreement (the “T R Miller Purchase Agreement”) with T R Miller and Thomas R.
Promotions assets generated $5.4 million of sales for the year ended December 31, 2022, compared to no sales from such assets for the year ended December 31, 2021.
The January 2022 acquisition of the G.A.P. Promotions assets generated approximately $3.5 million of sales for the year ended December 31, 2023, compared to approximately $5.4 million from such assets for the year ended December 31, 2022.
In addition, the Company must have entered into (i) an employment agreement with Stacy Miller upon mutually agreeable terms and (ii) a consulting agreement with TRM upon mutually agreeable terms pursuant to which TRM will provide certain consulting services to the Company for a period of three years following the TRM Closing Date.
In addition, the Company entered into (i) a consulting agreement with the Miller Stockholder providing for certain consulting services to the Company for a period of three years following the T R Miller Closing Date and (ii) an employment agreement with Stacy Miller.
Promotions is qualified in its entirety by the full text of the asset purchase agreement and amendment thereto, which are filed as Exhibit 2.1 and Exhibit 2.2 to this Annual Report, respectively, and incorporated by reference herein. 58 Trend Brand Solutions Assets Acquisition On August 31, 2022, the Company closed on an asset purchase agreement, dated as of July 13, 2022, as amended on August 31, 2022, to acquire cash, accounts receivable, inventory, fixed assets, and a customer list from Trend Brand Solutions, or the Trend Asset Purchase Agreement.
The foregoing description of the Trend Asset Purchase Agreement and assets acquired from Trend Brand Solutions is qualified in their entirety by the full text of the asset purchase agreement and amendment thereto, which are filed as Exhibit 2.3 and Exhibit 2.4 to this Annual Report, respectively, and incorporated by reference herein. 49 Premier NYC Acquisition On December 20, 2022, the Company closed on an asset purchase agreement, dated as of November 29, 2022 (the “Premier NYC Asset Purchase Agreement”), to acquire cash, accounts receivable, and a customer list from Premier NYC.
For the year ended December 31, 2022, increases in accounts receivable, inventory, and rewards program liability along with a decrease in accounts payable were the primary drivers of the net cash used in operating activities.
For the year ended December 31, 2022, an increase in accounts receivable of approximately $5.5 million, inventory of approximately $1.6 million, and rewards program liability of approximately $6.0 million were the primary drivers of net cash used in operating activities .
Miller (“TRM”), pursuant to which the Company agreed to acquire substantially all of the assets of TRM Corp. used in TRM Corp.’s branding, marketing and promotional products and services business (the “TRM Business”). The TRM Business has existing operations and has generated revenues.
Miller (the “Miller Stockholder”), pursuant to which we agreed to acquire substantially all of the assets of T R Miller used in T R Miller’s branding, marketing and promotional products and services business (the “T R Miller Business”). The T R Miller Business had existing operations and generated revenues.
We earn the majority of our revenue from the sale of unique, quality promotional products for a wide variety of industries primarily to support marketing efforts.
We earn the majority of our revenue from the sale of unique, quality promotional products for a wide variety of industries primarily to support marketing efforts. We also derive revenues from service fees from loyalty programs, event management, print services, fulfillment services, and technology services.
The decrease in net cash used in operating activities for the year ended December 31, 2022 compared to the year ended December 31, 2021 occurred in the normal course of business due to growth in organic business as well as an increase in rewards program liability. 51 Net cash used in investing activities was approximately $11.6 million for the year ended December 31 , 2022, as compared to net cash used in investing activities of approximately $0.4 million for the year ended December 31, 2021.
The change in net cash used in operating activities for the year ended December 31, 2023 compared to the year ended December 31, 2022 occurred in the normal course of business due to growth in organic business. 44 Net cash used in investing activities was approximately $2.1 million for the year ended December 31 , 2023, as compared to net cash used in investing activities of approximately $11.3 million for the year ended December 31, 2022.
Our recurring organic sales, defined as sales excluding revenue from the G.A.P Promotions, Trend Brand Solutions and Premier NYC asset acquisitions, increased 32.1%, or $12.8 million, to $52.5 million for the year ended December 31, 2022, from $ 39.7 million for the year ended December 31, 2021.
Our recurring organic sales, defined as sales excluding revenue from the G.A.P Promotions, Trend Brand Solutions, Premier NYC, and T R Miller asset acquisitions, increased 16.6%, or approximately $8.7 million, to approximately $61.2 million for the year ended December 31, 2023, from approximately $52.5 million for the year ended December 31, 2022. 42 Cost of Sales Cost of sales consists of the costs of purchasing merchandise and freight charges.
Years Ended December 31, 2022 2021 Amount % of Revenues Amount % of Revenues Sales $ 58,953,467 100.0 % $ 39,702,714 100.0 % Cost of Sales: Purchases 37,391,939 63.4 % 23,972,797 60.4 % Freight 4,991,854 8.5 % 3,893,847 9.8 % Total Cost of Sales $ 42,383,793 71.9 % $ 27,866,644 70.2 % Gross Profit $ 16,569,674 28.1 % $ 11,836,070 29.8 % Operating Expenses: General and Administrative Expenses 18,075,369 30.7 % 12,273,949 30.9 % Total Operating Expenses $ 18,075,369 30.7 % $ 12,273,949 30.9 % Earnings (Loss) from Operations $ (1,505,695 ) (2.6 )% $ (437,879 ) (1.1 )% Other Income and (Expense): Other Income (Expense) 112,507 0.2 % 702,280 1.8 % Interest Income (Expense) 94,680 0.2 % (136,661 ) 0.3 )% Unrealized Gain (Loss) on Short-Term Investments (179,120 ) (0.3 )% - - % Total Other Income and (Expense) $ 28,067 0.0 % $ 565,619 1.4 % Earnings (Loss) Before Income Taxes $ (1,477,628 ) (2.5 )% $ 127,740 0.3 % Provision for Income Taxes $ (699,187 ) (1.2 )% $ (107,500 ) (0.3 )% Net Earnings (Loss) $ (778,441 ) (1.3 )% $ 235,240 0.6 % Sales Sales consist primarily of the selling price of the merchandise, service or outbound shipping and handling charges, less discounts, coupons redeemed, returns and credits.
Years Ended December 31, 2023 2022 Amount % of Revenues Amount % of Revenues Sales $ 75,893,871 100.0 % $ 58,953,467 100.0 % Cost of Sales: Purchases 45,399,202 59.8 % 37,391,939 63.4 % Freight 5,613,169 7.4 % 4,991,854 8.5 % Total Cost of Sales $ 51,012,371 67.2 % $ 42,383,793 71.9 % Gross Profit $ 24,881,500 32.8 % $ 16,569,674 28.1 % Operating Expenses: General and Administrative Expenses 26,030,030 34.3 % 18,075,369 30.7 % Total Operating Expenses $ 26,030,030 34.3 % $ 18,075,369 30.7 % Earnings (Loss) from Operations $ (1,148,530 ) (1.5 )% $ (1,505,695 ) (2.6 )% Other Income and (Expense): Other Income 375,063 0.5 % 112,507 0.2 % Interest Income 570,387 0.8 % 94,680 0.2 % Unrealized Gain (Loss) on Investments 269,587 0.4 % (179,120 ) (0.3 )% Total Other Income and (Expense) $ 1,215,037 1.6 % $ 28,067 0.0 % Earnings (Loss) Before Income Taxes $ 66,507 0.1 % $ (1,477,628 ) (2.5 )% Provision for Income Taxes $ 31,449 0.0 % $ (699,187 ) (1.2 )% Net Earnings (Loss) $ 35,058 0.0 % $ (778,441 ) (1.3 )% Sales Sales consist primarily of the selling price of the merchandise, service or outbound shipping and handling charges, less discounts, coupons redeemed, returns and credits.
Our line of credit agreement with Bank of America was terminated on November 22, 2021 and on the same date was replaced with a secured revolving demand line of credit with Salem Five Cents Savings Bank for aggregate loans of up to $7.0 million, subject to a number of asset-related and other financial requirements and other covenants, terms and conditions as described in detail below under “ – Debt ”.
We have financed our operations primarily through cash generated from the IPO in November 2021, our private placement of common stock and warrants to purchase common stock in December 2021, operations, and bank borrowings, including a secured revolving demand line of credit that was opened with Salem Five Cents Savings Bank in November 2021 for aggregate loans of up to $7.0 million, subject to a number of asset-related and other financial requirements and other covenants, terms and conditions as described in detail below under “ – Debt ”.
The foregoing description of the TRM Purchase Agreement is qualified in its entirety by reference to the full text of such document which is filed as Exhibit 2.5 to this Annual Report, and which is incorporated herein by reference.
The foregoing description of the Loan Modification Agreement is qualified in its entirety by reference to the full text of the Loan Modification Agreement, a copy of which is attached as Exhibit 10.42 to this Annual Report, which is incorporated herein by reference.
Fair Value of Identifiable Assets Acquired: Cash $ 13,855 Restricted Stock 344,078 Contingent Earn-Out Liability 1,032,600 Total $ 1,390,533 Consideration Paid: Cash $ 440,025 Assumption of Liabilities 17,908 Restricted Stock 25,000 Contingent Earn-Out Liability 907,600 Total $ 1,390,533 59 For further discussion, see “Item 5.
The aggregate purchase price was $1,390,533, as follows: Fair Value of Identifiable Assets Acquired: Cash $ 13,855 Restricted Stock 344,078 Contingent Earn-Out Liability 1,032,600 Total $ 1,390,533 Consideration Paid: Cash $ 440,025 Assumption of Liabilities 17,908 Restricted Stock 25,000 Contingent Earn-Out Liability 907,600 Total $ 1,390,533 For further discussion, see Notes J and N to our financial statements beginning on page F-1 of this Annual Report.
Fair Value of Identifiable Assets Acquired: Inventory $ 91,096 Working Capital 879,486 Intangible - Customer List 2,275,290 Total $ 3,245,872 Consideration Paid: Cash 1,510,872 Restricted Stock 100,000 Contingent Earn-Out Liability 1,635,000 Total $ 3,245,872 For further discussion relating to this transaction, s ee Notes I and M to our financial s tatements beginning on page F-1 of this Annual Report, Item 1.01 of the Current Report on Form 8-K filed on January 26, 2022, and Items 1.01 and 2.01 of the Current Report on Form 8-K filed on February 1, 2022.
The aggregate purchase price was $3,245,872, as follows: Inventory $ 91,096 Working Capital 879,486 Intangible - Customer List 2,275,290 Total $ 3,245,872 Consideration Paid: Cash 1,510,872 Restricted Stock 100,000 Contingent Earn-Out Liability 1,635,000 Total $ 3,245,872 48 For further discussion relating to this transaction, see Notes J and N to our financial statements beginning on page F-1 of this Annual Report.
As a percentage of sales, cost of purchases increased to 63.4% for the year ended December 31, 2022, from 60.4% for the year ended December 31, 2021. In addition, freight costs increased to $5.0 million for the year ended December 31, 2022, or 28.2%, from $3.9 million for the year ended December 31, 2021.
In addition, freight costs increased to approximately $5.6 million for the year ended December 31, 2023, or 12.4%, from approximately $5.0 million for the year ended December 31, 2022. As a percentage of sales, freight costs decreased to 7.4% for the year ended December 31, 2023, from 8.5% for the year ended December 31, 2022.
In accordance with Financial Accounting Standards Board Accounting Standards Codification 805, “Business Combinations” (“FASB ASC 805”), the acquisition method of accounting has been applied and recognition of the assets acquired has been determined at fair value as of the acquisition date. All acquisition costs have been expensed as incurred.
Earn-out payments are due within 30 days from the date on which they are determined to be owed. In accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805, “Business Combinations” (“FASB ASC 805”), the acquisition method of accounting has been applied and recognition of the assets acquired has been determined at fair value as of the acquisition date.
As a percentage of sales, cost of sales increased to 71.9% for the year ended December 31, 2022 from 70.2 % for the year ended December 31, 2021. More specifically, cost of purchases increased to $37.4 million for the year ended December 31, 2022, or 56.0%, from $ 24.0 million for the year ended December 31, 2021.
More specifically, cost of purchases increased to approximately $45.4 million for the year ended December 31, 2023, or 21.4%, from approximately $37.4 million for the year ended December 31, 2022. As a percentage of sales, cost of purchases decreased to 59.8% for the year ended December 31, 2023, from 63.4% for the year ended December 31, 2022.
The increase in the dollar amount of operating expenses was due to an increase in general and administrative expenses of $5.8 million, or 47.3%, which in turn was primarily due to additional expenses related to the acquisition of the G.A.P.
The increase in the dollar amount of operating expenses was due to an increase in general and administrative expenses of approximately $8.0 million, or 44.0%, which in turn was primarily due to aggregate expenses related to the organic growth in our business.
For further discussion of changes in the income tax provision, refer to Notes A and R to our financial statements beginning on page F-1 of this Annual Report. 50 Net Earnings and Losses Our net loss for the year ended December 31, 2022 was $0.8 million, compared to net earnings of $0.2 million for the year ended December 31, 2021.
For further discussion of changes in the income tax provision, refer to Notes A and S to our financial statements beginning on page F-1 of this Annual Report.
The Company may freely draw upon the Loan subject to the Lender’s right to demand complete repayment of the Loan at any time. Late payments are subject to a late payment charge of 5%. In the event of failure to repay the loan after the Lender makes demand for full repayment, the interest rate will increase by 10%.
The Company may freely draw upon the Line of Credit subject to the Lender’s right to demand complete repayment of the Line of Credit at any time. Late payments are subject to a late payment charge of 5%.
Our sales increased 48.5% year-over-year in 2022 compared to 2021, which we believe was primarily due to higher spending from existing clients as well as business from new customers. Additionally, we benefited from the acquisition of the G.A.P. Promotions, LLC, or G.A.P.
Those program customers are geared towards longer-lasting relationships that helps secure recurring revenue well into the future. Our sales increased 28.7% year-over-year in 2023 compared to 2022, which we believe was primarily due to higher spending from existing clients as well as business from new customers. Additionally, we benefited from the acquisition of the assets of G.A.P.
Contractual Obligations Wildman Imprints Assets Acquisition On August 24, 2020, we entered into an Asset Purchase Agreement, or the WBG Asset Purchase Agreement, to acquire inventory, fixed assets, and a customer list of the Wildman Imprints division of WBG. The acquisition closed on September 26, 2020.
As of December 31, 2023 and 2022, we had not drawn any funds from the Loan under the Loan Agreement. Contractual Obligations Wildman Imprints Assets Acquisition On August 24, 2020, we entered into an Asset Purchase Agreement (the “Wildman Imprints Asset Purchase Agreement”), to acquire inventory, fixed assets, and a customer list of Wildman Imprints.
All inventory is stated at the lower of cost (first-in, first-out method) or market value. 60 Intangible Assets - Customer List The Company accounts for intangible assets under the provision of ASC 350-20 “Accounting for Goodwill and Other Intangible Assets.” The provision establishes standards for valuation and amortization of unidentifiable assets.
Intangible Assets - Customer List The Company accounts for intangible assets under the provision of ASC 350-20 “Accounting for Goodwill and Other Intangible Assets.” The provision establishes standards for valuation and amortization of unidentifiable assets. Under ASC 350-20-35-1, the cost of unidentifiable intangible assets is measured by the excess cost over the fair value of net assets acquired.
Promotions, Trend Brand Solutions and Premier NYC assets acquisitions, respectively. Net cash used in financing activities was approximately $2.9 million for the year ended December 31, 2022, as compared to net cash provided by financing activities of approximately $37.3 million for the year ended December 31, 2021.
Net cash used in financing activities was approximately $0.8 million for the year ended December 31, 2023, as compared to net cash provided by financing activities of approximately $2.7 million for the year ended December 31, 2022.
Our interest income (expense) was $94,680 for the year ended December 31, 2022, compared to $(136,661) for the year ended December 31, 2021. This change was primarily due to interest generated from short-term investments. Our unrealized gain (loss) on short-term investments was $(179,120) for the year ended December 31, 2022, compared to none for the year ended December 31, 2021.
This change was primarily due to interest generated from investments. Our unrealized gain (loss) on investments was $269,587 for the year ended December 31, 2023, compared to $(179,120) for the year ended December 31, 2022. This change was primarily due to the recording of all investments at estimated fair value.
Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period in which a change in judgment occurs. 61 Recent Accounting Pronouncements For a discussion of recently adopted accounting pronouncements, see Recently Issued Accounting Pronouncements in Note A to our financial statements beginning on page F-1 of this Annual Report.
Recent Accounting Pronouncements For a discussion of recently adopted accounting pronouncements, see Recently Issued Accounting Pronouncements in Note A to our financial statements beginning on page F-1 of this Annual Report. 53
In addition, as of the TRM Closing Date, the Company will undertake to perform or otherwise pay, satisfy and discharge as of the TRM Closing the Assumed Liabilities (as defined in the TRM Purchase Agreement).
In addition, as of the T R Miller Closing Date, the Company undertook to perform or otherwise pay, satisfy and discharge as of the T R Miller Closing the Assumed Liabilities (as defined in the T R Miller Purchase Agreement). The T R Miller Purchase Agreement also contained additional representations, warranties, covenants, indemnification provisions and other terms.
Summary of Cash Flow The following table provides detailed information about our net cash flow for the period indicated: Cash Flow Years Ended December 31, 2022 2021 Net cash used in operating activities $ (2,414,001 ) $ (5,291,715 ) Net cash used in investing activities (11,646,944 ) (388,948 ) Net cash provided by financing activities (2,911,967 ) 37,260,096 Net increase ( decrease) in cash and cash equivalents (16,972,912 ) 31,579,433 Cash and cash equivalents at beginning of year 32,226,668 647,235 Cash and cash equivalent at end of year $ 15,253,756 $ 32,226,668 Net cash used in operating activities was approximately $2.4 million for the year ended December 31, 2022, as compared to net cash used in operating activities of approximately $5.3 million for the year ended December 31, 2021.
Summary of Cash Flow The following table provides detailed information about our net cash flow for fiscal years ended December 31, 2023 and December 31, 2022: Cash Flow Years Ended December 31, 2023 2022 Net cash provided by (used in) operating activities $ (4,365,089 ) $ (2,949,602 ) Net cash provided by (used in) investing activities (2,074,559 ) (11,329,536 ) Net cash provided by (used in) financing activities (825,305 ) (2,693,774 ) Net increase ( decrease) in cash and cash equivalents (7,264,953 ) (16,972,912 ) Cash and cash equivalents at beginning of year 15,253,756 32,226,668 Cash and cash equivalents at end of year $ 7,988,803 $ 15,253,756 Net cash used in operating activities was approximately $4.4 million for the year ended December 31, 2023, as compared to net cash used in operating activities of approximately $2.9 million for the year ended December 31, 2022.
As of December 31, 2022, $6,667,595 remained available under the stock repurchase program for future stock repurchases. 55 Debt On November 22, 2021, we entered into a Revolving Demand Line of Credit Loan Agreement (the “Loan Agreement”), with Salem Five Cents Savings Bank (the “Lender”), for aggregate loans of up to $7 million (the “Loan” or “Line of Credit”), evidenced by a Revolving Demand Line of Credit Note, also dated November 22, 2021 (the “Note”).
“ Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. – Purchases of Equity Securities ” for further information about repurchases of common stock during the three months ended December 31, 2023. 45 Debt On November 22, 2021, we entered into a Revolving Demand Line of Credit Loan Agreement (the “Line of Credit Agreement”), with Salem Five Cents Savings Bank (the “Lender”), for aggregate loans of up to $7 million (the “Line of Credit”), evidenced by a Revolving Demand Line of Credit Note, also dated November 22, 2021 (the “Note”).
We define program clients as clients that have a contractual obligation for specific ongoing branding needs. Program offerings include ongoing inventory, use of technology platform, warehousing, creative services, and additional client support. Those program customers are geared towards longer-lasting relationships that helps secure recurring revenue well into the future.
We define transactional customers as customers that place an order with us and do not have an agreement with us covering ongoing branding requirements. We define program clients as clients that have a contractual obligation for specific ongoing branding needs. Program offerings include ongoing inventory, use of technology platform, warehousing, creative services, and additional client support.
Premier NYC Acquisition On December 20, 2022, the Company closed on an asset purchase agreement, dated as of November 29, 2022, or the Premier NYC Asset Purchase Agreement, to acquire cash, accounts receivable, and a customer list from Premier NYC.
Trend Brand Solutions Assets Acquisition On August 31, 2022, the Company closed on an asset purchase agreement, dated as of July 13, 2022, as amended on August 31, 2022, to acquire cash, accounts receivable, inventory, fixed assets, and a customer list from Trend Brand Solutions (the “Trend Asset Purchase Agreement”).
For the year ended December 31, 2022, purchases of short-term investments, additions to intangible assets related to customer lists and additions to software-related property and equipment were the primary drivers of the net cash used in investing activities.
For the years ended December 31, 2023 and 2022, asset acquisitions for net cash outlays totaling approximately $0.7 million and $0.7 million, respectively, additions to software-related property and equipment totaling approximately $1.0 million and $0.6 million, respectively, and purchases of investments totaling approximately $0.4 million and $10.0 million, respectively, were the primary drivers of the net cash used in investing activities.
At December 31, 2022 and December 31, 2021, the Company had net deposits totaling 6,000,000 and $43,878, respectively. Our other principal cash payment obligations have consisted principally of obligations under the loans described above.
These accounts are adjusted on a periodic basis as reward cards are funded or reduced at the direction of the customers. At December 31, 2023 and December 31, 2022, the Company had net deposits totaling $875,000 and $6,000,000, respectively. Our other principal cash payment obligations have consisted principally of obligations under the Line of Credit described above.
For the year ended December 31, 2021, increases in accounts receivable, inventory, and prepaid expenses along with a decrease in accounts payable were the primary drivers of the net cash used in operating activities.
For the year ended December 31, 2023, increases in accounts receivable of approximately $ 6.0 million, accrued payroll and related of approximately $ 2.0 million, and unearned revenue of approximately $ 4.5 million along with a decrease in rewards program liability of approximately $ 5.1 million were the primary drivers of the net cash used in operating activities.
As a percentage of sales, operating expenses decreased to 30.7% for the year ended December 31, 2022, from 30.9 % for the year ended December 31, 2021.
Our operating expenses increased 44.0%, or approximately $8.0 million, to approximately $26.0 million for the year ended December 31, 2023, from approximately $18.1 million for the year ended December 31, 2022. As a percentage of sales, operating expenses increased to 34.3% for the year ended December 31, 2023, from 30.7% for the year ended December 31, 2022.
These factors were only partially offset by the increase in sales during 2022 to $5.4 million and $1.1 million from none during 2021 from the acquisition of the G.A.P. Promotions assets and Trend Brand Solutions assets, respectively, and the increase of $12.8 million from recurring organic sales during 2022 compared to 2021.
Promotions, Trend Brand Solutions, Premier NYC, and T R Miller to approximately $14.7 million in aggregate, from approximately $6.5 million from the acquisition of the assets of G.A.P. Promotions, Trend Brand Solutions, and Premier NYC during 2022, and the increase of approximately $8.7 million from recurring organic sales during 2023 compared to 2022.

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