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Stran & pany(SWAG) - 2024 Q3 - Quarterly Report
SWAGStran & pany(SWAG)2025-03-07 21:15

Financial Performance - For the three months ended September 30, 2024, total sales increased by 2.4% to 20.144millioncomparedto20.144 million compared to 19.674 million for the same period in 2023[162]. - The company reported a 4.9% increase in sales for the nine months ended September 30, 2024, compared to the same period in 2023[162]. - Total sales increased by 2.4% to approximately 20.1millionforthethreemonthsendedSeptember30,2024,comparedtoapproximately20.1 million for the three months ended September 30, 2024, compared to approximately 19.7 million for the same period in 2023[173]. - Total sales for the nine months ended September 30, 2024, increased by 4.9% to approximately 55.7million,comparedtoapproximately55.7 million, compared to approximately 53.1 million for the same period in 2023[183]. Revenue Composition - Program clients accounted for 83.2% of total revenue for the three months ended September 30, 2024, up from 80.5% in the same period of 2023[161]. - The company acquired assets from T R Miller Co., Inc. in June 2023 and from Bangarang Enterprises, LLC in August 2024, contributing to revenue growth[162]. Profitability - Gross profit for the three months ended September 30, 2024, was 5.952million,representingagrossmarginof29.55.952 million, representing a gross margin of 29.5%, down from 32.5% in the prior year[170]. - Gross profit decreased by 7.0% to approximately 6.0 million, or 29.5% of sales, for the three months ended September 30, 2024, compared to approximately 6.4million,or32.56.4 million, or 32.5% of sales, for the same period in 2023[175]. - Gross profit for the nine months ended September 30, 2024, was approximately 17.0 million, or 30.6% of sales, compared to approximately 17.1million,or32.117.1 million, or 32.1% of sales, for the same period in 2023[183]. - The Stran segment's gross profit margin decreased to 31.4% for the nine months ended September 30, 2024, from 32.1% in 2023, primarily due to increases in product costs from vendors[186]. Expenses - Operating expenses increased to 8.136 million for the three months ended September 30, 2024, compared to 5.732millioninthesameperiodof2023,reflectingariseingeneralandadministrativeexpenses[170].−Operatingexpensesincreasedby41.95.732 million in the same period of 2023, reflecting a rise in general and administrative expenses[170]. - Operating expenses increased by 41.9% to approximately 8.1 million for the three months ended September 30, 2024, from approximately 5.7millionforthesameperiodin2023[176].−TheincreaseinoperatingexpensesfortheninemonthsendedSeptember30,2024,wasprimarilyduetohighergeneralandadministrativeexpenses,totalingapproximately5.7 million for the same period in 2023[176]. - The increase in operating expenses for the nine months ended September 30, 2024, was primarily due to higher general and administrative expenses, totaling approximately 21.0 million[183]. - Operating expenses increased by 16.8% to approximately 21.0millionfortheninemonthsendedSeptember30,2024,fromapproximately21.0 million for the nine months ended September 30, 2024, from approximately 18.0 million in 2023, with operating expenses as a percentage of sales decreasing to 37.7% from 33.9%[187]. Net Income/Loss - The net loss for the three months ended September 30, 2024, was 2.038million,comparedtoanetincomeof2.038 million, compared to a net income of 1.265 million for the same period in 2023[170]. - Net loss for the three months ended September 30, 2024, was approximately 2.0million,comparedtoanetprofitofapproximately2.0 million, compared to a net profit of approximately 1.3 million for the same period in 2023[181]. - Net loss for the nine months ended September 30, 2024, was approximately 3.6million,comparedtoanetlossofapproximately3.6 million, compared to a net loss of approximately 0.1 million for the same period in 2023[193]. Assets and Liquidity - As of September 30, 2024, total assets were approximately 48.8million,withtotalstockholders′equityofapproximately48.8 million, with total stockholders' equity of approximately 32.3 million[163]. - Cash and cash equivalents as of September 30, 2024, were approximately 10.0million,withinvestmentstotalingapproximately10.0 million, with investments totaling approximately 6.9 million[194]. - The Company is required to maintain a minimum liquidity of 7.5millionatalltimes,definedascashandshort−terminvestments,lessrewardsprogramliabilities[213].−TheCompanyhadnotdrawnanyfundsfromtheRevolvingLineofCreditasofSeptember30,2024,andDecember31,2023[226].Taxation−Thecompanyanticipatesthatitseffectivetaxratewillremainsimilartotheraterecordedin2023duetomanagement′sexpectationsoffutureearnings[180].−Thecompanyanticipatesthatitseffectivetaxratewillremainsimilartotheraterecordedin2023,withanincometaxprovisionofapproximately7.5 million at all times, defined as cash and short-term investments, less rewards program liabilities[213]. - The Company had not drawn any funds from the Revolving Line of Credit as of September 30, 2024, and December 31, 2023[226]. Taxation - The company anticipates that its effective tax rate will remain similar to the rate recorded in 2023 due to management's expectations of future earnings[180]. - The company anticipates that its effective tax rate will remain similar to the rate recorded in 2023, with an income tax provision of approximately 2 thousand for the nine months ended September 30, 2024[192]. Lease and Future Commitments - A new seven-year lease agreement for office space in North Quincy, Massachusetts, was signed, starting June 1, 2025, with an initial base rent of approximately 21thousandpermonth[165].−Futureminimumleasepaymentstotalapproximately21 thousand per month[165]. - Future minimum lease payments total approximately 998,000, with 198,000dueintheremainderof2024[224].AcquisitionsandInvestments−TheCompanyenteredintoaSecuredPartySaleAgreementtoacquiresubstantiallyallassetsofGanderGroupforapproximately198,000 due in the remainder of 2024[224]. Acquisitions and Investments - The Company entered into a Secured Party Sale Agreement to acquire substantially all assets of Gander Group for approximately 1.1 million in cash and the assumption of liabilities totaling approximately 5.5million[220].−TheGanderGroupTransactionresultedintheacquisitionofallequityofGanderGroupLouisiana,LLC,whichbecameawholly−ownedsubsidiaryoftheCompany[221].FinancialCovenants−TheCompanywasrequiredtomaintainaminimumnetworthof5.5 million[220]. - The Gander Group Transaction resulted in the acquisition of all equity of Gander Group Louisiana, LLC, which became a wholly-owned subsidiary of the Company[221]. Financial Covenants - The Company was required to maintain a minimum net worth of 2,000,000 by December 31, 2021, 2,750,000byDecember31,2022,and2,750,000 by December 31, 2022, and 3,500,000 by December 31, 2023[212]. - The Company must maintain a minimum interest coverage ratio of 1.25:1 for the fiscal year ending December 31, 2024[213]. - The Company is prohibited from incurring additional indebtedness except in the ordinary course of business[214]. Impairment and Fair Value - The Company performed an annual impairment review of goodwill and indefinite-lived intangible assets during the fourth fiscal quarter of each year[229]. - The company assesses impairment of long-lived assets based on significant underperformance, changes in asset usage, and negative industry trends[232]. - Contingent earn-out liabilities are measured at fair value using the Black-Scholes-Merton Call Option Formula, with significant inputs including operating income projections and volatility[233]. - The fair value of earn-out liabilities can significantly impact reported financial results based on changes in assumptions and estimates[233].