Financial Performance - For the three months ended June 30, 2024, sales decreased by 4.1% compared to the same period in 2023, while for the six months ended June 30, 2024, sales increased by 6.4% compared to the same period in 2023[153]. - Sales decreased by 4.1% to approximately $16.7 million for the three months ended June 30, 2024, compared to approximately $17.3 million for the same period in 2023[170]. - Total sales for the six months ended June 30, 2024, increased by 6.4% to approximately $35.5 million, compared to approximately $33.4 million for the same period in 2023[183]. - Gross profit increased by 4.2% to approximately $5.5 million, or 32.8% of sales, for the three months ended June 30, 2024, compared to approximately $5.2 million, or 30.1% of sales, for the same period in 2023[173]. - Gross profit for the six months ended June 30, 2024, increased by 4.0% to approximately $11.1 million, or 31.2% of sales, compared to approximately $10.7 million, or 31.9% of sales, for the same period in 2023[185]. - Net loss for the three months ended June 30, 2024, was approximately $1.0 million, compared to approximately $0.9 million for the same period in 2023[180]. - Net loss for the six months ended June 30, 2024, was approximately $1.5 million, compared to approximately $1.4 million for the same period in 2023[191]. Revenue Composition - Program clients accounted for 81.3% of total revenue for the three months ended June 30, 2024, up from 77.4% in the same period of 2023[152]. - For the three and six months ended June 30, 2024, program clients represented 82.7% of total revenue, indicating a growing reliance on programmatic business[152]. Assets and Equity - As of June 30, 2024, the company had approximately $46.6 million in total assets and approximately $34.3 million in total stockholders' equity[154]. - As of June 30, 2024, the company had cash and cash equivalents of approximately $11.9 million and investments of approximately $9.6 million, indicating sufficient liquidity for anticipated cash needs[192]. Costs and Expenses - Total cost of sales decreased by 7.7% to approximately $11.2 million for the three months ended June 30, 2024, from approximately $12.2 million for the same period in 2023, with cost of sales as a percentage of sales decreasing to 67.2%[172]. - Total cost of sales for the six months ended June 30, 2024, increased by 7.5% to approximately $24.4 million, with cost of sales as a percentage of sales decreasing to 68.8%[184]. - Operating expenses increased by 5.3% to approximately $6.6 million for the three months ended June 30, 2024, resulting in operating expenses as a percentage of sales increasing to 39.4%[174]. Cash Flow - Net cash provided by operating activities increased to approximately $4.2 million for the six months ended June 30, 2024, compared to $3.7 million for the same period in 2023, primarily due to a decrease in accounts receivable[194]. - Net cash provided by investing activities was approximately $0.4 million for the six months ended June 30, 2024, compared to a net cash used of approximately $3.1 million in the same period of 2023, driven by increased proceeds from the sale of investments[195]. - Net cash used in financing activities increased to approximately $0.8 million for the six months ended June 30, 2024, compared to $0.6 million for the same period in 2023, mainly due to reduced payments of contingent earn-out liabilities[196]. Debt and Financing - The company terminated its Revolving Line of Credit, which had an aggregate principal amount of up to $7.0 million, effective August 26, 2024[158]. - The company has a Revolving Line of Credit of up to $7.0 million, with no funds drawn as of June 30, 2024[212]. - The company’s debt service coverage ratio requirement was modified to a "Minimum Interest Coverage" of 1.25:1 for the fiscal year ending December 31, 2024[209]. Acquisitions and Investments - The company acquired the assets of Bangarang Enterprises, LLC for approximately $1.1 million in cash and assumed liabilities totaling approximately $5.5 million[160]. - The company benefited from the acquisition of T R Miller Co., Inc. in June 2023, contributing to revenue growth from existing clients and new customers[153]. Stock Repurchase - As of June 30, 2024, the company had repurchased a total of 1,815,166 shares of common stock for approximately $3.4 million, with approximately $6.6 million remaining available under the stock repurchase program[200]. - The company’s stock repurchase program allows for repurchases up to $10.0 million, with no defined number of shares to be repurchased over a specified timeframe[198]. Lease Obligations - The company entered into a seven-year lease agreement for new office space with an initial base rent of approximately $21 thousand per month, subject to annual escalations of 2.2% - 2.5%[156]. - Future minimum lease payments total approximately $1.1 million, with $287,000 due in the remainder of 2024[214]. Financial Reporting and Assumptions - The company performs an annual impairment review of goodwill during the fourth fiscal quarter, which is highly subjective and requires significant judgment[219]. - The fair value of reporting units is determined using both the income approach and the market approach, incorporating significant estimates and assumptions[220]. - The company assesses impairment of long-lived assets whenever events indicate that the carrying value may not be recoverable, considering various macroeconomic and company-specific factors[221]. - Contingent earn-out liabilities are measured at fair value using significant unobservable inputs, with the Black-Scholes-Merton Call Option Formula applied[222]. - The company evaluates its estimates and assumptions on an ongoing basis, which could lead to significant differences between estimated and actual results[217]. - The assumptions related to the valuation of goodwill and intangible assets have the greatest potential impact on the financial statements[218]. - Changes in assumptions and estimates regarding long-lived assets could materially impact reported financial results[221]. - The company considers significant underperformance relative to historical or projected future operating results as a trigger for impairment reviews[221]. Regulatory Compliance - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to rely on certain exemptions from disclosure requirements[164]. - Recent accounting pronouncements are discussed in Note A.16 of the financial statements[223].
Stran & pany(SWAG) - 2024 Q2 - Quarterly Report