UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10−Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ Commission File Number: 001-41038 STRAN & COMPANY, INC. (Exact name of registrant as specified in its charter) Nevada 04-329720 ...

Part I [Business Overview](index=6&type=section&id=Item%201.%20Business.) Stran & Company, Inc. provides outsourced marketing solutions, specializing in promotional products and loyalty programs to build brand awareness and customer loyalty - The company offers comprehensive outsourced marketing solutions, including promotional products, loyalty incentives, e-commerce platforms, creative services, and warehousing distribution, aimed at enhancing client brand awareness and loyalty[25](index=25&type=chunk)[26](index=26&type=chunk)[29](index=29&type=chunk) Company Revenue and Growth | Metric | 2021 | 2020 | CAGR (1995-2021) | | :--- | :--- | :--- | :--- | | Annual Revenue | >**$39.7 million** | - | ~**22%** | | Revenue Growth Rate (2017-2021) | - | - | ~**19%** | | Gross Margin (2017-2021) | ~**30%** | ~**30%** | - | - The company is a leader in the promotional products industry, ranking **30th** on Print+Promo Marketing's 2021 Top Distributors list and **32nd** on ASI's Counselor magazine's 2021 Top 40 Distributors list[28](index=28&type=chunk) [Company Overview](index=6&type=section&id=Overview) The company is an outsourced marketing solutions provider, developing complex marketing programs to build lasting brand loyalty - As an outsourced marketing solutions provider, the company develops complex marketing programs for clients through promotional product and loyalty incentive expertise, aiming to build lasting brand loyalty[25](index=25&type=chunk) - The company sources and brands products through third-party manufacturers and decorators, then resells finished goods to clients, offering value-added services like custom sourcing, e-commerce solutions, creative services, warehousing/fulfillment, and loyalty programs[26](index=26&type=chunk)[29](index=29&type=chunk) 2021 Key Financial Data | Metric | Amount (Million USD) | | :--- | :--- | | Total Assets | **51.2** | | Stockholders' Equity | **41.6** | - The company's highly diversified client base spans multiple industries, including pharmaceutical, healthcare, manufacturing, technology, finance, construction, and consumer goods, featuring some of the world's largest corporations[30](index=30&type=chunk) [Industry Analysis](index=7&type=section&id=Our%20Industry) The US promotional products market is large and fragmented, with significant growth opportunities in various vertical markets - The US promotional products market is large and highly fragmented, exceeding **$23 billion** in 2021 with over **40,000** participating businesses, and the total addressable market potentially reaching **$384 billion** including product packaging, loyalty incentives, printing, and trade show markets[33](index=33&type=chunk)[34](index=34&type=chunk) US Promotional Products Market Size (ASI Data) | Year | Sales (Billion USD) | YoY Change | | :--- | :--- | :--- | | 2019 | **25.8** | - | | 2020 | **20.7** | **-19.8%** | | 2021 | **23.2** | **+12.1%** | - The promotional products industry demonstrates relative resilience against other advertising forms like TV and digital ads, performing better in brand recognition and sales generation due to its physical nature and high impact[36](index=36&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - The COVID-19 pandemic severely impacted the promotional products industry, with sales declining nearly **20%** in 2020, and while rebounding in 2021, remained below pre-pandemic levels; healthcare, finance, retail, technology, and manufacturing were the largest growth opportunities in 2021[35](index=35&type=chunk)[43](index=43&type=chunk) [Impact of COVID-19 Pandemic on Business](index=9&type=section&id=The%20COVID-19%20Pandemic's%20Effects%20on%20Our%20Business) The COVID-19 pandemic adversely affected company operations and financial performance, leading to demand shifts and cost increases - The COVID-19 pandemic adversely affected the company's operations and financial performance, including decreased demand for promotional products and services, supply chain challenges, and increased freight and raw material costs[45](index=45&type=chunk) - The company responded to pandemic challenges by implementing cost-saving measures, cash preservation, remote work, focusing on core clients, offering value-added services like e-commerce platforms and fulfillment, exploring acquisition opportunities such as Wildman Imprints and G.A.P. Promotions, and securing PPP loans[46](index=46&type=chunk)[49](index=49&type=chunk) - The company observed positive signs of pandemic recovery, anticipating that pent-up demand will offset prior sales losses as vaccination rates increase and the economy reopens[47](index=47&type=chunk) [Competitive Strengths](index=10&type=section&id=Competitive%20Strengths) The company leverages superior technology, industry leadership, a global network, and a client-centric approach for competitive advantage - The company possesses superior and unique technology, including a customized Magento e-commerce platform and a new Oracle NetSuite ERP system, providing efficient order processing, warehousing, and fulfillment capabilities[50](index=50&type=chunk) - The company holds a leading position in the industry with over **25 years** of history and scale advantages, enabling efficient execution of large projects, investment in sales tools and technology, and achievement of operational efficiencies[50](index=50&type=chunk) - The company has established an extensive global network of partner factories, decorators, printers, and warehouses, offering flexible solutions to meet client financial, timing, geographic, and branding objectives[50](index=50&type=chunk) - The company adopts a client-centric approach, deeply understanding client goals and challenges, providing unique solutions, and acting as an extension of client teams to support marketing campaigns throughout their lifecycle[50](index=50&type=chunk) - The company boasts a diversified client base, serving over **2,000** active clients and more than **30** Fortune 500 companies across various industries, including pharmaceutical, healthcare, manufacturing, technology, finance, construction, and consumer goods[52](index=52&type=chunk) - The company benefits from an experienced management team, with senior executives averaging over **20 years** of experience in the promotional products industry[52](index=52&type=chunk) - The company has extensive experience in asset acquisitions, successfully acquiring Wildman Imprints (September 2020) and G.A.P. Promotions (January 2022), expanding its client base and geographic reach[52](index=52&type=chunk) [Growth Strategies](index=11&type=section&id=Growth%20Strategies) The company's growth strategies focus on selective acquisitions, continuous technology investment, new client acquisition, and deeper client penetration - The company will selectively pursue acquisitions targeting businesses with key client relationships, value-added products or services, or those offering synergistic benefits such as printing, packaging, point-of-sale displays, loyalty incentive management, and decoration[51](index=51&type=chunk) - Acquisition targets include branded merchandise companies in the Western US (Texas, California, Colorado, Oregon, or Washington) with **$5-10 million** in revenue; smaller promotional companies with **$2-5 million** in revenue lacking programmatic capabilities but with at least **30%** gross margins; and businesses offering complementary services like packaging, loyalty and incentives, decoration, and event/trade show services[53](index=53&type=chunk) - The company will continue investing in technological innovation, upgrading its e-commerce platform, and implementing the Oracle NetSuite ERP system to meet client needs and support acquisition integration[54](index=54&type=chunk) - The company plans to expand its client base by growing its sales team, nurturing existing client relationships, actively seeking new clients, leveraging referrals, enhancing social media and SEO marketing, and participating in industry trade shows[54](index=54&type=chunk)[73](index=73&type=chunk) - The company aims to deepen client penetration by cross-selling and up-selling, converting more transactional clients into higher-revenue programmatic clients; currently, programmatic clients account for **75.7%** of total revenue (2021) but represent a minority of active clients[54](index=54&type=chunk)[221](index=221&type=chunk) [Products and Services](index=13&type=section&id=Products%20and%20Services) The company offers comprehensive marketing services, including branded merchandise, loyalty programs, and fulfillment, delivered through technology platforms - The company offers comprehensive marketing services, including custom branded merchandise, commercial printing, loyalty and incentive programs, packaging, and point-of-sale solutions, delivered efficiently through technology platforms and warehousing fulfillment systems[55](index=55&type=chunk) - The company has specialized teams, including operations and e-commerce (custom technology solutions), client teams (understanding client objectives), an in-house creative agency and merchandising team (unique product ideas and design), and technology and program teams (managing order processes, product and inventory distribution, and reporting)[59](index=59&type=chunk) - Promotional product programs are a core business, with the company distributing a wide range of promotional items, including wearables, writing instruments, drinkware, technology, and event-related products[58](index=58&type=chunk) - Loyalty and incentive programs aim to drive customer or employee behavior, offering gamification tools, social media integration, and points programs, with rewards including physical products, digital rewards, gift cards, and experiential incentives; the company partners with CarltonOne Engagement Corporation to offer SaaS employee loyalty and incentive programs, earning commissions as an authorized reseller[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - Packaging and point-of-sale services focus on custom packaging and POS displays to enhance brand visibility and drive sales[63](index=63&type=chunk) - Commercial and digital printing services provide on-demand printing for marketing materials like business cards and brochures, efficiently managed through technology platforms and a network of printers[64](index=64&type=chunk) - Warehousing and fulfillment services offer global solutions through a network of industry leaders like Harte Hanks, including real-time inventory reporting, climate-controlled facilities, high-value product security, storage, on-demand printing, and direct mail services[65](index=65&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - The technology platform is a customized Magento Open Source-based e-commerce platform used to manage all aspects of marketing programs, including branded merchandise, printing, event assets, CRM, loyalty, and incentives, offering real-time data and mobile reporting capabilities[66](index=66&type=chunk) [Human Capital and Culture](index=16&type=section&id=Human%20Capital%20and%20Culture) The company supports client marketing goals through technology and services, while fostering employee development and engagement - The company helps clients achieve marketing and business objectives through technology, logistics, creative services, and customer support, while prioritizing employee talent development[67](index=67&type=chunk) - Employees are encouraged to participate in professional development opportunities such as online courses, webinars, training, and industry association events to enhance knowledge, experience, and engagement[68](index=68&type=chunk) [Pricing](index=16&type=section&id=Pricing) The company leverages its purchasing power and direct factory relationships to offer competitive pricing and maintain healthy margins - As a member of Facilisgroup, the company has purchasing power with over **500** suppliers, enabling favorable pricing to remain competitive in price-sensitive bids[69](index=69&type=chunk) - The company has established direct relationships with multiple factories in the US and overseas, utilizing a hybrid approach of direct and supplier sourcing to reduce merchandise costs and maintain healthy margins[70](index=70&type=chunk) [Supplier and Fulfillment Relationships](index=16&type=section&id=Supplier%20and%20Fulfillment%20Relationships) The company maintains strategic partnerships with fulfillment providers and a redundant supplier network to ensure global distribution and mitigate risks - The company has strategic partnerships with fulfillment and commercial printing providers within the US, including a nearly decade-long collaboration with industry leader Harte Hanks for global warehousing and distribution solutions[71](index=71&type=chunk)[72](index=72&type=chunk) - The company does not rely on any single supplier, maintaining a redundant network of vendors to mitigate potential supply disruption risks[72](index=72&type=chunk) [Marketing](index=16&type=section&id=Marketing) The company employs a direct sales team and diverse marketing activities to acquire and retain clients - The company maintains a direct sales team comprising **21** external and **22** internal sales representatives, incentivizing sales personnel through a commission structure[73](index=73&type=chunk) - Marketing activities include social media, email marketing, traditional networking at trade shows and events, and client referrals[73](index=73&type=chunk) [Customers and Markets](index=17&type=section&id=Customers%20and%20Markets) The company serves a diverse client base, including Fortune 500 companies, primarily in the US, with long-term contracts - The company serves approximately **2,000** active clients, including over **30** Fortune 500 companies, with a diversified client base spanning pharmaceutical, healthcare, manufacturing, technology, finance, construction, and consumer goods industries[74](index=74&type=chunk) - The company has long-term contracts with many clients, averaging approximately **10 years**, though most do not include minimum purchase guarantees or exclusive sourcing clauses[74](index=74&type=chunk)[77](index=77&type=chunk) - In 2020, the company served as a contractor for the 2020 US Census, contributing approximately **$15 million** in revenue, or **27.1%** of total revenue, which was considered non-recurring and is not expected to recur[75](index=75&type=chunk) Major Client Revenue Contribution | Client | 2020 Total Revenue Share | 2021 Total Revenue Share | | :--- | :--- | :--- | | TJX Companies, Inc. | **10.1%** | **7.5%** | | Other Clients | <**4%** | <**5.5%** | - The company primarily conducts business with US clients but also provides e-commerce, logistics support, and other promotional services for client programs in Canada and Europe[78](index=78&type=chunk) [Online Store](index=17&type=section&id=Online%20Store) The company utilizes technology to provide online platforms for efficient promotional marketing and direct-to-consumer sales - The company leads in leveraging technology to provide online platforms, helping clients efficiently manage promotional marketing programs and directly sell branded merchandise to consumers[79](index=79&type=chunk) - The company's technology platform currently offers over **280** online stores for clients, combining a B2C retail shopping experience with robust B2B marketing service backend functionalities[79](index=79&type=chunk) [Competition](index=18&type=section&id=Competition) The company faces intense competition in the promotional products industry from various domestic and international players - Key competitors in the promotional products business include 4Imprint Group plc, Brand Addition Limited, BAMKO LLC, Staples Promotional Products, Boundless Network, Inc., and HALO Branded Solutions, Inc., alongside numerous foreign, regional, and local competitors[82](index=82&type=chunk) - Price competition from rivals or their offering of higher quality products or broader product portfolios could adversely affect the company's operating results[82](index=82&type=chunk) [Program Management](index=18&type=section&id=Our%20Program%20Management) The company's program management is built on creative products, technological integration, global distribution, proactive client service, and compliance - The company's program management is based on six key elements: creative products (advertising agency model, offering custom products and sourcing methods), integration (technology platform integration with systems like CRM, accounting, and procurement), robust technology (custom Magento Open Source-based platform providing B2B solutions), global distribution (partnering with Harte Hanks for warehousing, fulfillment, on-demand printing, direct mail, and kitting services), proactive client service (dedicated account directors and support teams for each client, with regular communication and feedback surveys), and compliance (ensuring brand standards, product quality, and safety, and pursuing EcoVadis certification)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [Intellectual Property](index=21&type=section&id=Intellectual%20Property) The company protects its intellectual property, including trademarks and e-commerce platforms, through federal law and confidentiality agreements - The company uses the registered trademark "STRÄN" and registered trade name "Stran Promotional Solutions," relying on federal trademark law, unregistered copyright law, and trade secret law to protect its intellectual property, including its e-commerce platform and new ERP system[88](index=88&type=chunk)[89](index=89&type=chunk) - The company further protects intellectual property through confidentiality agreements with executives and directors[89](index=89&type=chunk) [Seasonality and Cyclicality](index=21&type=section&id=Seasonality%20and%20Cyclicality) The company's business is generally not seasonal, but the promotional products industry is cyclical, influenced by economic conditions - The company's business is generally not subject to seasonal fluctuations; while some client businesses are seasonal, the promotional products industry as a whole is not[90](index=90&type=chunk) - The promotional products industry is cyclical, performing well during favorable economic conditions and experiencing slower or negative growth during economic weakness or uncertainty[91](index=91&type=chunk) [Security](index=21&type=section&id=Security) The company manages and stores sensitive information, implementing security measures to detect and respond to data security incidents - The company regularly receives and stores client, vendor, and third-party information, and has a data security incident detection, containment, and response plan in place[92](index=92&type=chunk) - Despite security measures, risks such as unauthorized access, service interruptions, and data breaches exist, potentially leading to business disruption, information loss, data corruption, and reputational damage[92](index=92&type=chunk) [Employees](index=21&type=section&id=Employees) As of December 31, 2021, the company had 66 full-time employees and maintains good labor relations - As of December 31, 2021, the company had **66** full-time employees and **1** independent contractor executive[93](index=93&type=chunk) - The company believes its employees are not unionized and maintains good relations with them[93](index=93&type=chunk) [Regulation](index=21&type=section&id=Regulation) The company's operations are subject to various trade, privacy, consumer protection, and environmental regulations, with non-compliance posing significant risks - The company's business is affected by various trade regulations, including import duties, quotas, and health emergencies; the company maintains a redundant supplier network to mitigate reliance on a single supplier[94](index=94&type=chunk)[95](index=95&type=chunk) - E-commerce operations are subject to evolving laws and regulations concerning personal privacy, data security, consumer protection, and sales tax, which may result in additional compliance costs and potential liabilities[96](index=96&type=chunk) - The production, distribution, and sale of the company's products are governed by regulations such as the Federal Food, Drug, and Cosmetic Act, Federal Trade Commission Act, Lanham Act, state consumer protection laws, competition laws, and federal, state, and local workplace health and safety laws[97](index=97&type=chunk) - California Proposition 65 requires warnings for products containing carcinogens or reproductive toxins, and New York has proposed a similar "Consumer Right to Know Act," potentially leading to additional labeling requirements and compliance costs[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - The company is also subject to federal, state, and local regulations including US Customs, Consumer Product Safety Act (including CPSIA), labor and employment laws, Foreign Corrupt Practices Act, securities laws, and environmental laws; non-compliance could result in reputational damage, civil and criminal liabilities, fines, and increased compliance costs[101](index=101&type=chunk)[111](index=111&type=chunk) - Data privacy laws and regulations like CCPA and GDPR impose strict requirements on the collection, use, disclosure, transfer, storage, and protection of personal information; non-compliance could lead to government enforcement actions, litigation, and negative publicity[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Changes or interpretations of tax laws and regulations could impact the company's effective tax rate, ability to repatriate offshore earnings, and potentially result in additional costs or restrictions[109](index=109&type=chunk)[110](index=110&type=chunk) [Corporate Structure and History](index=24&type=section&id=Corporate%20Structure%20and%20History) The company, founded in 1995, underwent a significant reorganization in 2021, including re-domiciliation, a stock split, and capital raises - The company was incorporated on November 17, 1995, in Massachusetts as "Strän & Company, Inc."[112](index=112&type=chunk) - On September 26, 2020, the company acquired the account managers and client base of Wildman Imprints' promotional products business unit[112](index=112&type=chunk) - On May 24, 2021, the company reorganized and changed its name to "Stran & Company, Inc.," simultaneously relocating its domicile to Nevada and executing a 100,000-for-1 forward stock split of common stock, increasing outstanding common shares from **100** to **10,000,000**[113](index=113&type=chunk) - On November 12, 2021, the company completed its Initial Public Offering (IPO), issuing **4,987,951** units, each comprising one share of common stock and one warrant, for gross proceeds of approximately **$20.7 million**[117](index=117&type=chunk) - On December 10, 2021, the company completed a private placement, issuing **4,371,926** shares of common stock and associated warrants, for gross proceeds of approximately **$21.7 million**[118](index=118&type=chunk) - On January 31, 2022, the company acquired the brand, marketing, and promotional products and services business assets of G.A.P. Promotions[119](index=119&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors.) This section details various risks related to the company's business, securities ownership, and common stock and warrants, including COVID-19 impacts, operational challenges, and market competition - The COVID-19 pandemic has significantly impacted the company's business, including changes in customer purchasing patterns, supply chain disruptions, and increased freight and raw material costs, with potential future outbreaks or new variants continuing to affect performance[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - Clients may cancel or reduce orders, particularly if major clients experience business downturns or fail to meet commitments, which could adversely affect the company's operating results[129](index=129&type=chunk)[130](index=130&type=chunk) - The company faces risks in identifying, completing acquisitions, and successfully integrating acquired businesses, including maintaining uniform standards, management distraction, unexpected integration expenses, and undiscovered liabilities[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - Information technology system disruptions or cyberattacks could disrupt business operations, lead to data loss, damage the company's reputation, and increase costs[135](index=135&type=chunk) - Non-compliance with data privacy and security laws and regulations, such as CCPA and GDPR, could result in government enforcement actions, litigation, negative publicity, and harm to operating results[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - The Consumer Product Safety Improvement Act (CPSIA) and other government regulations could lead to increased compliance costs, reputational damage, and civil and criminal liabilities[141](index=141&type=chunk)[142](index=142&type=chunk) - Merchandise supply shortages, production disruptions, and local conditions in operating countries, such as economic uncertainty, political instability, or labor disputes, could adversely affect operating results[143](index=143&type=chunk) - The implementation of technology initiatives may disrupt operations in the short term and might not deliver anticipated benefits or could exceed cost expectations[144](index=144&type=chunk) - Failure to maintain positive labor relations could result in labor shortages, disruptions, or work stoppages, impacting operating margins and revenue[146](index=146&type=chunk) - The risk of client payment defaults, especially during economic downturns, could significantly impact the company's collection efforts and operating results[147](index=147&type=chunk) - Reliance on a single or few large clients, such as the 2020 US Census project, and market expectations of unsustainable growth, could lead to a decline in securities prices and reputational damage[148](index=148&type=chunk) - Significant increases in freight and shipping costs, along with transportation disruptions, could harm the company's business, operating results, and financial condition[149](index=149&type=chunk)[150](index=150&type=chunk) - Unforeseen catastrophic events, such as pandemics, terrorist attacks, or extreme weather, could cause economic and financial disruptions, affecting product and service supply and harming customer willingness to purchase[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Intense industry competition means rivals may gain market share by lowering prices or offering superior products, impacting the company's revenue and profit[154](index=154&type=chunk)[155](index=155&type=chunk) - Global, national, or regional economic slowdowns, high unemployment, changes in tax laws, or increased costs could adversely affect operating results[156](index=156&type=chunk)[157](index=157&type=chunk) - Rising commodity and raw material prices could significantly increase costs and reduce profitability unless these costs can be passed on to clients[159](index=159&type=chunk)[160](index=160&type=chunk) - Changes in trade regulations, quotas, tariffs, or other restrictions could increase costs or limit product imports, harming revenue and operating results[161](index=161&type=chunk)[162](index=162&type=chunk) - The apparel industry, including uniforms and corporate image wear, is influenced by changing fashion trends; misjudging consumer preferences could lead to brand image damage and decreased product demand[163](index=163&type=chunk) - Failure to consistently protect intellectual property could result in the company incurring substantial costs to maintain, defend, protect, and enforce its intellectual property[164](index=164&type=chunk) - Product design or products assisted in production could lead to product liability, warranty liability, or personal injury claims and lawsuits, potentially having a material adverse effect on the business[165](index=165&type=chunk)[166](index=166&type=chunk) - Cyclical litigation could adversely affect financial condition and operating results[167](index=167&type=chunk) - Volatility in global financial markets could adversely affect performance, including securities price fluctuations, decreased liquidity, and reduced credit availability[168](index=168&type=chunk) - Failure to attract and retain key management or other employees could adversely affect the business[169](index=169&type=chunk) - Failure to establish and maintain effective internal controls could adversely affect the business and securities price[170](index=170&type=chunk) - Increased employee benefit costs could impact financial performance and cash flow[171](index=171&type=chunk) - Impairment charges may be recognized, adversely affecting financial condition and operating results[172](index=172&type=chunk) - Environmental regulations could impact future operating results[173](index=173&type=chunk) - Failure to accurately predict future tax burdens, increased taxation, or unfavorable resolution of tax disputes could adversely affect operating results and financial condition[174](index=174&type=chunk)[175](index=175&type=chunk) - Early termination or failure to renew the secured credit facility could strain the company's ability to meet other obligations[176](index=176&type=chunk) - An active market for the company's common stock and warrants may not develop, market prices may fluctuate, and investors could lose part or all of their investment[177](index=177&type=chunk)[178](index=178&type=chunk) - The company may not maintain its Nasdaq listing, leading to delisting of stock and warrants, which would impair shareholders' ability to buy and sell securities and affect market prices[179](index=179&type=chunk) - Warrants may be worthless if the common stock market price does not reach or exceed the exercise price[180](index=180&type=chunk) - Warrant holders do not have shareholder rights until they exercise and acquire common stock[182](index=182&type=chunk) - Warrant certificates designate New York State and federal courts as exclusive forums, potentially limiting warrant holders' ability to choose jurisdiction[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) - The company may issue common stock or convertible securities in the future that dilute existing shareholders, or the expiration of lock-up agreements could lead to a decline in stock price[192](index=192&type=chunk) - Future issuance of debt securities or preferred stock could adversely affect the return levels for common stock holders[193](index=193&type=chunk) - The company has the right to issue "blank check" preferred stock without shareholder approval, which could adversely affect the rights of securities holders[194](index=194&type=chunk) - If the company's securities become subject to "penny stock" rules, it will make trading its stock more difficult[195](index=195&type=chunk) - As an emerging growth company, the company is subject to less stringent ongoing public reporting requirements than non-emerging growth companies, potentially providing shareholders with less information[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) [Unresolved Staff Comments](index=40&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The company has no unresolved staff comments - Not applicable[200](index=200&type=chunk) [Properties](index=40&type=section&id=Item%202.%20Properties.) The company leases its Quincy, Massachusetts headquarters and maintains satellite offices and remote sales representatives across several US locations - The company's headquarters are located in Quincy, Massachusetts, leasing approximately **10,000 square feet** of office space with a lease term extending to May 2025[201](index=201&type=chunk) - The company maintains satellite offices in Gloucester, Massachusetts; Warsaw, Indiana; Fairfield, Connecticut; and Mount Pleasant, South Carolina, with sales representatives working remotely in **12** other US locations[32](index=32&type=chunk)[202](index=202&type=chunk) - The company believes all its properties are well-maintained, in good condition, and suitable for its business needs[202](index=202&type=chunk) [Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings.) The company is not currently involved in any legal proceedings or claims that would materially impact its business or financial condition - The company is not currently aware of any legal proceedings or claims that could materially adversely affect its business, financial condition, or operating results[203](index=203&type=chunk) [Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) Mine safety disclosure requirements are not applicable to the company - Not applicable[204](index=204&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) The company's common stock and warrants began trading on Nasdaq in November 2021, with IPO proceeds primarily used for debt repayment and working capital, and no dividends planned - The company's common stock and warrants began trading on the Nasdaq Capital Market on November 9, 2021, under the symbols "STRN" and "STRNW," respectively[207](index=207&type=chunk) - As of March 24, 2022, there were approximately **6** record holders of the company's common stock[208](index=208&type=chunk) IPO Proceeds Utilization (as of December 31, 2021) | Use | Amount (Million USD) | | :--- | :--- | | Debt Repayment | **3.5** | | Working Capital | **4.9** | | Unused Proceeds | **9.5** | | Total Net Proceeds | ~**17.94** | | Property, Plant, Equipment, Other Business Acquisitions, Temporary Investments | **0** | - The company currently does not intend to pay dividends in the foreseeable future, opting to reinvest future earnings into business development[190](index=190&type=chunk)[214](index=214&type=chunk) - No unregistered securities were sold during fiscal year 2021, and no common stock was repurchased during the fourth quarter of 2021[215](index=215&type=chunk)[216](index=216&type=chunk) [Reserved](index=43&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section analyzes the company's financial condition and operating results for 2021 and 2020, highlighting sales growth, margin compression, net income decline, and enhanced liquidity from recent capital raises - The company's primary revenue is derived from selling unique promotional products, with service fees also generated from loyalty programs, event management, printing, fulfillment, and technology services[220](index=220&type=chunk) - The majority of the company's revenue comes from programmatic business, accounting for **77.6%** and **75.7%** of total revenue in 2020 and 2021, respectively, though programmatic clients represent a small fraction (fewer than **350**) of over **2,000** active clients[221](index=221&type=chunk) - Sales increased by **5.2%** in 2021, primarily driven by increased spending from existing clients, new client business, and the acquisition of Wildman Imprints assets in September 2020[223](index=223&type=chunk) - In the future, pent-up demand from broader COVID-19 immunity and social reopening is expected to offset prior sales losses, but persistent increases in freight and raw material costs, along with supply chain challenges, will partially counteract this growth[223](index=223&type=chunk) - The trend towards remote work has led the company to ship more directly to individual homes, which is expected to increase freight service fees and fulfillment revenue, along with associated costs[224](index=224&type=chunk) Key Financial Performance (2021 vs 2020) | Metric | 2021 (Million USD) | 2020 (Million USD) | Change (%) | | :--- | :--- | :--- | :--- | | Sales | **39.70** | **37.75** | **+5.2%** | | Cost of Sales | **27.87** | **26.27** | **+6.1%** | | Gross Profit | **11.84** | **11.48** | **+3.1%** | | Operating Expenses | **12.27** | **9.99** | **+22.8%** | | Operating Income (Loss) | (**0.44**) | **1.49** | **-129.5%** | | Income Before Taxes | **0.13** | **1.45** | **-91.2%** | | Net Income | **0.24** | **1.03** | **-77.1%** | Sales Composition Change (2021 vs 2020) | Sales Category | 2021 (Million USD) | 2020 (Million USD) | Change (Million USD) | | :--- | :--- | :--- | :--- | | Wildman Imprints Acquisition | **8.3** | **2.2** | **+6.1** | | Recurring Organic Sales (Excl. Census & PPE) | **31.2** | **20.9** | **+10.3** | | US Census Project | <**0.002** | **10.5** | **-10.5** | | Personal Protective Equipment (PPE) | <**0.25** | **4.2** | **-3.95** | | **Total Sales** | **39.7** | **37.8** | **+1.9** | Cost of Sales Composition Change (2021 vs 2020) | Cost Category | 2021 (Million USD) | 2020 (Million USD) | Change (%) | % of Sales (2021) | % of Sales (2020) | | :--- | :--- | :--- | :--- | :--- | :--- | | Purchase Costs | **23.97** | **24.17** | **-0.8%** | **60.4%** | **64.0%** | | Freight | **3.89** | **2.10** | **+85.5%** | **9.8%** | **5.6%** | | **Total Cost of Sales** | **27.87** | **26.27** | **+6.1%** | **70.2%** | **69.6%** | - Operating expenses (primarily general and administrative) increased by **22.8%** from **$10 million** in 2020 to **$12.3 million** in 2021, mainly due to Wildman Imprints acquisition-related costs, new ERP system implementation, IPO and listing expenses, and organic business growth[257](index=257&type=chunk) Other Income and Expense Changes (2021 vs 2020) | Item | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Other Expenses | (**83,148**) | **0** | (**83,148**) | | Other Income | **15,366** | **10,000** | **+5,366** | | PPP Loan Forgiveness | **770,062** | **0** | **+770,062** | | Interest Expense | (**136,661**) | (**49,457**) | (**87,204**) | | **Total** | **565,619** | (**39,457**) | **+605,076** | Effective Income Tax Rate (2021 vs 2020) | Year | Effective Income Tax Rate | | :--- | :--- | | 2021 | **4.3%** | | 2020 | **29.1%** | - Net income decreased by **77.1%**, primarily due to the cessation of non-recurring revenue from the 2020 US Census project and PPE sales, increased IPO-related expenses, and higher freight costs in 2021, partially offset by the Wildman Imprints acquisition and growth in recurring organic sales[261](index=261&type=chunk)[262](index=262&type=chunk) Cash Flow Summary (2021 vs 2020) | Cash Flow Category | 2021 (Million USD) | 2020 (Million USD) | | :--- | :--- | :--- | | Net Cash from Operating Activities | (**5.83**) | (**1.99**) | | Net Cash from Investing Activities | (**0.39**) | (**0.18**) | | Net Cash from Financing Activities | **37.80** | **0.38** | | **Net Increase (Decrease) in Cash and Cash Equivalents** | **31.58** | (**1.79**) | | Cash and Cash Equivalents, End of Period | **32.23** | **0.65** | - Operating cash outflow increased in 2021, primarily due to increases in accounts receivable, inventory, and accounts payable, reflecting organic business growth and the integration of Wildman Imprints assets[266](index=266&type=chunk) - Financing cash inflow significantly increased in 2021, primarily from net proceeds of the IPO and private placement, partially offset by borrowings and repayments on the bank credit facility[268](index=268&type=chunk) - The company received full forgiveness for its PPP loan on June 24, 2021, and fully repaid its EIDL program loan in 2021[269](index=269&type=chunk)[270](index=270&type=chunk) [Overview](index=43&type=section&id=Overview) The company provides outsourced marketing solutions, generating revenue from promotional product sales and various services, with programmatic clients contributing the majority of income - The company is an outsourced marketing solutions provider, sourcing and reselling branded products through third-party manufacturers and decorators, and offering services such as custom sourcing, e-commerce, creative, warehousing/fulfillment, on-demand printing, kitting, point-of-sale displays, and loyalty incentives[218](index=218&type=chunk)[219](index=219&type=chunk) - The company's primary revenue comes from promotional product sales, also earning service fees from loyalty programs, event management, printing, fulfillment, and technology services[220](index=220&type=chunk) - In 2020 and 2021, programmatic clients accounted for **77.6%** and **75.7%** of total revenue, respectively, but represented only a small portion (fewer than **350**) of active clients; the company plans to convert more transactional clients into programmatic clients by expanding its sales team[221](index=221&type=chunk)[222](index=222&type=chunk) - Sales increased by **5.2%** in 2021, primarily due to increased spending from existing clients, new client business, and the acquisition of Wildman Imprints in September 2020; future pent-up demand is expected to offset prior sales losses, but rising freight and raw material costs will partially offset growth[223](index=223&type=chunk) - As of December 31, 2021, the company's total assets were **$51.2 million**, and stockholders' equity was **$41.6 million**[226](index=226&type=chunk) [Recent Developments](index=45&type=section&id=Recent%20Developments) Recent developments include the acquisition of G.A.P. Promotions' assets and the appointment of a new Chief Operating Officer - On January 21, 2022, the company entered into an agreement to acquire the brand, marketing, and promotional products and services business assets of G.A.P. Promotions, with a total purchase price including **$0.5 million** cash, restricted common stock, installment payments (**$0.18 million** in year one, **$0.3 million** in year two), inventory costs, and gross profit-based earn-out payments[227](index=227&type=chunk)[228](index=228&type=chunk) - The acquisition was completed on January 31, 2022, with the company issuing **46,083** shares of restricted common stock to Gayle Piraino, vesting quarterly over one year[231](index=231&type=chunk)[232](index=232&type=chunk) - On March 11, 2022, Sheila Johnshoy was appointed Chief Operating Officer with an annual salary of **$0.25 million**, eligible for performance-based cash bonuses and equity awards (**5,000** restricted shares and **40,000** options)[234](index=234&type=chunk)[235](index=235&type=chunk) [Impact of COVID-19 Pandemic](index=48&type=section&id=Impact%20of%20COVID-19%20Pandemic) The COVID-19 pandemic adversely affected company operations and financial performance, leading to decreased demand, supply chain challenges, and increased costs, with ongoing uncertainty - The COVID-19 pandemic adversely affected the company's operations and financial performance, with personal protective equipment sales decreasing from **$4.2 million** in 2020 to less than **$0.25 million** in 2021, failing to offset the decline in promotional product demand[238](index=238&type=chunk) - The pandemic led to decreased promotional product demand, supply chain challenges, and increased freight and raw material costs, with these impacts expected to persist into 2022[238](index=238&type=chunk) - The company responded to the pandemic by implementing cost savings, cash preservation, remote work, focusing on core clients, offering value-added services, exploring acquisition opportunities, and securing PPP loans[239](index=239&type=chunk)[240](index=240&type=chunk) - The company observed positive signs of pandemic recovery, anticipating that pent-up demand and social reopening will offset prior sales losses[241](index=241&type=chunk) - The duration and impact of the pandemic remain uncertain, potentially leading to continued supply chain disruptions, reduced customer spending, and increased operating costs[243](index=243&type=chunk)[244](index=244&type=chunk) [Emerging Growth Company](index=49&type=section&id=Emerging%20Growth%20Company) The company qualifies as an "emerging growth company" under the JOBS Act, benefiting from certain disclosure exemptions and an extended accounting transition period - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to take advantage of certain disclosure exemptions, such as not requiring an auditor's report on internal controls, reduced executive compensation disclosure, and exemption from shareholder advisory votes[245](index=245&type=chunk)[246](index=246&type=chunk) - The company has elected to use the extended transition period for complying with new or revised accounting standards, meaning its financial statements may not be comparable to those of non-emerging growth companies that comply with new standards[245](index=245&type=chunk) - The company will retain its emerging growth company status for up to five years, unless its total annual gross revenue reaches **$1.07 billion** or its market capitalization exceeds **$700 million**[247](index=247&type=chunk) [Principal Factors Affecting Our Financial Performance](index=50&type=section&id=Principal%20Factors%20Affecting%20Our%20Financial%20Performance) Key factors influencing the company's financial performance include client acquisition and retention, competitive pricing, product line expansion, industry dynamics, technology, talent, and market conditions - Key factors affecting the company's financial performance include its ability to acquire and retain clients, offer competitive product pricing, broaden its product lines, industry demand and competition, leverage technology and develop efficient processes, attract and retain talent, and market conditions and position[250](index=250&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) Sales increased by 5.2% in 2021, but higher operating expenses and the absence of non-recurring revenue led to an operating loss and a significant decline in net income Results of Operations Summary (2021 vs 2020) | Metric | 2021 (USD) | 2020 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Sales | **39,702,714** | **37,752,173** | **+5.2%** | | Cost of Sales | **27,866,644** | **26,267,309** | **+6.1%** | | Gross Profit | **11,836,070** | **11,484,864** | **+3.1%** | | Operating Expenses | **12,273,949** | **9,994,891** | **+22.8%** | | Operating Income (Loss) | (**437,879**) | **1,489,973** | **-129.5%** | | Income Before Taxes | **127,740** | **1,450,516** | **-91.2%** | | Net Income | **235,240** | **1,028,280** | **-77.1%** | | Basic EPS | **0.02** | **0.10** | **-80.0%** | | Diluted EPS | **0.01** | **0.10** | **-90.0%** | - Sales grew **5.2%** to **$39.7 million** in 2021, primarily driven by increased existing client spending, new client business, and the September 2020 Wildman Imprints acquisition, but offset by the cessation of non-recurring revenue from the 2020 US Census project (**$10.5 million**) and personal protective equipment sales (**$4.2 million**)[254](index=254&type=chunk)[255](index=255&type=chunk) - Cost of sales increased by **6.1%** to **$27.9 million**, rising from **69.6%** of sales in 2020 to **70.2%** in 2021; purchase costs slightly decreased by **0.8%**, but freight costs significantly increased by **85.5%**, primarily due to overall freight rate increases and a shift to shipping to individual addresses[256](index=256&type=chunk) - Operating expenses increased by **22.8%** to **$12.3 million**, rising from **26.5%** of sales in 2020 to **30.9%** in 2021, primarily due to Wildman Imprints acquisition-related expenses, new ERP system implementation, IPO and listing costs, and organic business growth[257](index=257&type=chunk) - Regarding other income and expenses, interest expense increased by **176.3%**, other expenses increased by **$83,148** (primarily due to higher-than-expected earn-out payments for the Wildman Imprints acquisition), and PPP loan forgiveness income was **$770,062**[259](index=259&type=chunk) - The effective income tax rate decreased from **29.1%** in 2020 to **4.3%** in 2021, primarily influenced by reductions in federal and state income tax rates[260](index=260&type=chunk) - Net income decreased by **77.1%** to **$0.2 million**, primarily due to the disappearance of non-recurring revenue in 2020, increased IPO-related expenses in 2021, and rising freight costs, partially offset by the Wildman Imprints acquisition and growth in recurring organic sales[261](index=261&type=chunk)[262](index=262&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash position significantly improved to $32.2 million by year-end 2021, providing sufficient liquidity for operations and future growth initiatives - As of December 31, 2021, the company held approximately **$32.2 million** in cash and cash equivalents[263](index=263&type=chunk) - The company believes its current cash levels are sufficient to meet operating and cash payment obligations for fiscal year 2022 and long-term, including costs associated with being a public company[264](index=264&type=chunk) - Additional cash resources may be required in the future to address changes in business conditions, business expansion, or potential investments/acquisitions, which could be raised through equity or debt securities issuance or obtaining additional credit facilities[264](index=264&type=chunk) [Summary of Cash Flow](index=54&type=section&id=Summary%20of%20Cash%20Flow) Operating cash outflow increased in 2021, while financing activities generated substantial cash from IPO and private placement, leading to a significant net cash increase Cash Flow Statement Summary (2021 vs 2020) | Cash Flow Category | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | Net Cash from Operating Activities | (**5,833,887**) | (**1,990,467**) | | Net Cash from Investing Activities | (**388,948**) | (**176,465**) | | Net Cash from Financing Activities | **37,802,268** | **375,907** | | **Net Increase (Decrease) in Cash and Cash Equivalents** | **31,579,433** | (**1,791,025**) | | Cash and Cash Equivalents, End of Period | **32,226,668** | **647,235** | - Operating cash outflow increased in 2021, primarily due to increases in accounts receivable, inventory, and accounts payable, reflecting organic business growth and the integration of Wildman Imprints assets[266](index=266&type=chunk) - Investing cash outflow increased in 2021, primarily for additional technology investments in software-related property and equipment, and new personnel[267](index=267&type=chunk) - Financing cash inflow significantly increased in 2021, primarily from net proceeds of the IPO and private placement, partially offset by borrowings and repayments on the bank credit facility; 2020 financing cash inflow was mainly from PPP and EIDL program loans[268](index=268&type=chunk) - The company received full forgiveness for its PPP loan on June 24, 2021, and fully repaid its EIDL program loan in 2021[269](index=269&type=chunk)[270](index=270&type=chunk) [Initial Public Offering](index=54&type=section&id=Initial%20Public%20Offering) The company completed its IPO in November 2021, raising $20.7 million in gross proceeds, with a portion used for debt repayment and working capital - On November 12, 2021, the company completed its IPO, issuing **4,987,951** units at **$4.15** per unit, each comprising one share of common stock and one warrant, for gross proceeds of **$20,699,996.65**[271](index=271&type=chunk)[272](index=272&type=chunk) - After deducting underwriting commissions, discounts, and fees, the company received net proceeds of approximately **$17,944,652**[272](index=272&type=chunk) - The exercise price of IPO warrants was adjusted to **$4.81375** per share due to a subsequent private placement, with a five-year term[271](index=271&type=chunk) - As of December 31, 2021, approximately **$3.5 million** was used for debt repayment, **$4.9 million** for working capital, and approximately **$9.5 million** of IPO proceeds remained unused[274](index=274&type=chunk) [Private Placement](index=55&type=section&id=Private%20Placement) The company completed a private placement in December 2021, raising $21.7 million in gross proceeds, earmarked for acquisitions, technology, and infrastructure expansion - On December 10, 2021, the company completed a private placement, issuing **4,371,926** shares of common stock at **$4.97** per share and providing warrants to investors, for gross proceeds of approximately **$21.7 million**[276](index=276&type=chunk) - Private placement warrants have an exercise price of **$4.97** per share, a five-year term, and a downward price adjustment mechanism, potentially reducing to a minimum of **$1.00** per share (subject to shareholder approval)[276](index=276&type=chunk) - Net cash proceeds from the private placement were approximately **$19.8 million**, earmarked for acquisitions and partnerships, technology investments, expanding corporate infrastructure, sales team and marketing efforts, and general working capital and administrative purposes[277](index=277&type=chunk) - The company paid EF Hutton an **8.0%** cash placement fee and a **0.5%** non-accruing fee, and issued **131,158** warrants to its designees[278](index=278&type=chunk) [Debt](index=56&type=section&id=Debt) The company secured a $7 million revolving demand credit facility in November 2021, secured by all assets, with specific covenants and restrictions - On November 22, 2021, the company entered into a revolving demand credit facility loan agreement with Salem Five Cents Savings Bank for a total loan amount of up to **$7 million**, secured by all of the company's assets[282](index=282&type=chunk)[287](index=287&type=chunk) - The credit facility's borrowing availability is the lesser of **$7 million** or the sum of **80%** of eligible accounts receivable plus **50%** of eligible inventory (with an inventory component cap of **$2 million**)[283](index=283&type=chunk) - The loan bears interest at the prime rate plus **0.5%**, with monthly interest payments, and is expected to continue for **12 months**, though the bank has the right to demand full repayment at any time[285](index=285&type=chunk)[286](index=286&type=chunk) - The company must comply with several affirmative covenants and financial requirements, including a debt service coverage ratio of at least **1.20x** EBITDA and minimum net worth requirements (**$2 million** for 2021, **$2.75 million** for 2022, and **$3.5 million** for 2023)[289](index=289&type=chunk)[290](index=290&type=chunk) - The company is also restricted from incurring additional debt, making loans or investments, acquiring businesses, making capital expenditures, or selling significant assets without the lender's consent[291](index=291&type=chunk) - As of December 31, 2021, the company had not drawn any funds from this loan agreement[296](index=296&type=chunk) - In September 2021, Executive Chairman Andrew Stranberg provided the company with a **$0.5 million** unsecured loan at **5%** annual interest, which was fully repaid on November 22, 2021[297](index=297&type=chunk) [Contractual Obligations](index=59&type=section&id=Contractual%20Obligations) The company's contractual obligations include contingent earn-out liabilities, notes payable, and future minimum property lease payments, with no off-balance sheet arrangements - Contingent earn-out liabilities from the Wildman Imprints acquisition, as of December 31, 2021, included a current portion of **$665,855** and a long-term portion of **$976,078**[298](index=298&type=chunk) - The Wildman acquisition-related note payable was **$162,358**, non-interest bearing, payable quarterly, and expected to be fully paid in 2022[299](index=299&type=chunk)[541](index=541&type=chunk) Future Minimum Property Lease Payments (as of December 31, 2021) | Year | Lease Payments (USD) | | :--- | :--- | | 2022 | **310,095** | | 2023 | **323,001** | | 2024 | **311,317** | | 2025 | **150,365** | | 2026 | - | | **Total** | **1,094,778** | - On January 21, 2022, the company entered into an agreement to acquire G.A.P. Promotions' assets, with a purchase price including **$0.5 million** cash, restricted common stock, installment payments (**$0.18 million** in year one, **$0.3 million** in year two), inventory costs, and gross profit-based earn-out payments[302](index=302&type=chunk)[303](index=303&type=chunk) - The company has no off-balance sheet arrangements[311](index=311&type=chunk) [Critical Accounting Policies and Estimates](index=62&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies and estimates cover revenue recognition, inventory valuation, intangible assets, and equity compensation, adhering to U.S. GAAP while leveraging emerging growth company exemptions - The company uses the accrual basis of accounting, recognizing revenue when earned and expenses when incurred, in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP)[314](index=314&type=chunk) - As an emerging growth company, the company has elected to use the extended transition period provided by the JOBS Act for complying with new or revised accounting standards, which may result in its financial statements not being comparable to those of non-emerging growth companies[315](index=315&type=chunk) - Cash and cash equivalents include all highly liquid investments with original maturities of three months or less[316](index=316&type=chunk) - Concentration of credit risk is managed through ongoing credit evaluations of clients and by placing deposits with high-quality financial institutions[317](index=317&type=chunk) - Inventory, comprising finished goods (branded products) and work-in-process (unbranded products), is

Financial Data and Key Metrics Changes - Revenue for the year ended December 31, 2021, increased by 5.2% to $39.7 million from $37.8 million in 2020, driven by higher spending from existing clients and new customers [27] - Gross profit increased by 3.1% to $11.8 million, representing 29.8% of sales, compared to 30.4% in the previous year [28] - Net income decreased to approximately $235,000 from $1 million in the prior year, primarily due to the non-recurrence of significant sales from the U.S. Census program and PPE products [31] Business Line Data and Key Metrics Changes - Recurring organic sales, excluding certain programs, increased roughly 50% to $31.2 million for the year ended December 31, 2021 [7] - The company achieved strong organic growth despite pandemic impacts and is expecting double-digit year-over-year organic growth in 2022 [8] Market Data and Key Metrics Changes - The promotional products industry is valued at over $23 billion and is highly fragmented with more than 40,000 providers, indicating significant consolidation opportunities [16] - The broader market for products, packaging, loyalty incentive programs, printing, and trade shows is valued at $387 billion, presenting further growth potential [17] Company Strategy and Development Direction - The company is focused on expanding its service offerings and investing heavily in sales and marketing to differentiate itself as a service-driven, customer-focused organization [12] - M&A opportunities are being pursued to enhance growth, with a proven track record of identifying and integrating synergistic companies [13][14] - The company aims to leverage its strong balance sheet to capitalize on market volatility and pursue strategic opportunities without the need for debt [25][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery from the COVID-19 pandemic, noting an increase in requests for proposals as companies prepare to spend more [17] - The company is well-positioned to accelerate growth in 2022, with a strong balance sheet and a commitment to driving shareholder value [35] Other Important Information - The company has over $32 million in cash and cash equivalents, approximately $40 million in working capital, and no debt as of December 31, 2021 [22] - A share repurchase program of up to $10 million has been approved, with plans to utilize it soon [24] Q&A Session Summary Question: Can you provide insight into the current acquisition pipeline and market multiples? - The acquisition pipeline is strong, with numerous discussions ongoing, and multiples for potential acquisitions are generally in the range of 3 to 6 times EBITDA [38][39] Question: How long does integration take for recent acquisitions, and what role does the new ERP system play? - Integration is expected to be streamlined with the new ERP system, which is set to go live by the end of Q2 2022, enhancing visibility and efficiency [41][42] Question: What strategies are being pursued for new customer acquisition? - Strategies include geographic expansion and targeting smaller companies that have not fully utilized the company's technology and supply chain strengths [44][46] Question: How are shipping costs being managed in light of inflation? - The company is able to pass increased shipping costs onto customers due to flexible pricing structures, while also negotiating better rates with shipping providers [56] Question: What is the estimated EBITDA margin without non-recurring expenses? - On a normalized basis, the EBITDA margin could have been around 5% to 7%, with a goal to reach closer to 10% moving forward [59][63] Question: Do you have access to additional capital for larger acquisitions? - The company has a $7 million revolving line of credit available, with potential for asset-based lending to increase that capacity if needed [64]

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10−Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ Commission File Number: 001-41038 STRAN & COMPANY, INC. (Exact name of registrant as specified in its charter) Nevada 04-32 ...