Stran & pany(US:SWAG)2025-11-12 21:48Financial Performance - For the three months ended September 30, 2025, sales increased by 29.0% compared to the same period in 2024, and for the nine months ended September 30, 2025, sales increased by 56.7% compared to the same period in 2024[144]. - Total sales increased by 29.0% to approximately $25.98 million for the three months ended September 30, 2025, compared to $20.14 million for the same period in 2024[153]. - Total sales increased by 56.7% to approximately $87.3 million for the nine months ended September 30, 2025, compared to approximately $55.7 million for the same period in 2024[166]. - Gross profit increased by 18.8% to approximately $7.07 million, representing 27.2% of sales for the three months ended September 30, 2025, down from 29.5% in 2024[156]. - Gross profit increased by 49.3% to approximately $25.4 million, representing 29.1% of sales, down from 30.6% in the prior year[168]. - Net loss narrowed to approximately $1.24 million for the three months ended September 30, 2025, compared to a net loss of approximately $2.04 million in 2024[163]. - Net loss for the nine months ended September 30, 2025, was approximately $1.0 million, a significant improvement from a net loss of approximately $3.6 million in the same period of 2024[174]. Revenue Sources - Program clients accounted for 78% of total revenue for the three months ended September 30, 2025, down from 83.2% in the same period of 2024[141]. - The majority of revenue is derived from program business, with fewer than 350 of over 2,000 active customers classified as program clients[141]. - Sales from the Stran segment rose to approximately $60.3 million, a 15.7% increase, while the SLS segment saw a significant increase of 671.5% to approximately $26.9 million due to the acquisition of Gander Group Assets[166]. - The Stran segment's sales increased to approximately $17.64 million, while the SLS segment's sales surged by 139.0% to approximately $8.34 million due to the acquisition of Gander Group Assets[153]. Costs and Expenses - Cost of sales rose by 33.2% to approximately $18.91 million for the three months ended September 30, 2025, from $14.19 million in 2024, resulting in a total cost of sales percentage of 72.8%[154]. - Total cost of sales increased by 60.0% to approximately $61.8 million, with the cost of sales as a percentage of total sales rising to 70.9% from 69.4%[167]. - Operating expenses rose by 8.8% to approximately $8.85 million for the three months ended September 30, 2025, with a decrease in the Stran segment's expenses to 39.0% of sales[158]. - Operating expenses rose by 30.3% to approximately $27.3 million, with a decrease in operating expenses as a percentage of sales to 31.3% from 37.7%[170]. Assets and Liquidity - As of September 30, 2025, total assets were approximately $50.3 million, with total stockholders' equity of approximately $30.2 million[145]. - As of September 30, 2025, the company had cash and cash equivalents of approximately $6.7 million and investments of approximately $5.1 million[175]. - The company believes current cash levels will be sufficient for anticipated cash needs over the next 12 months, but may require additional resources for future expansions or acquisitions[176]. - The company is required to maintain a minimum liquidity of $7.5 million at all times, defined as cash and short-term investments, less rewards program liabilities[192]. Acquisitions and Transactions - The company acquired substantially all of the assets of Bangarang Enterprises, LLC (Gander Group) in August 2024, contributing to revenue growth[144]. - The company entered into a Secured Party Sale Agreement to acquire Gander Group assets for approximately $1.1 million in cash and the assumption of liabilities totaling approximately $5.5 million[196][197]. - The Gander Group Transaction resulted in the indirect acquisition of substantially all assets of Gander Group, including all equity of Gander Group Louisiana, which became a wholly-owned subsidiary[198]. Tax and Other Income - Other income improved to approximately $304 thousand for the three months ended September 30, 2025, compared to an expense of $22 thousand in 2024[159]. - Other income increased to approximately $584 thousand, compared to an expense of approximately $6 thousand in the prior year, primarily due to the release of a receivable reserve[171]. - Interest income increased to approximately $87 thousand for the three months ended September 30, 2025, compared to $64 thousand in 2024, due to higher average program deposit balances[159]. - The income tax benefit for the three months ended September 30, 2025, was approximately $72 thousand, accounting for 5.5% of the loss before income taxes[161]. Accounting and Compliance - The Company prepares financial statements in accordance with U.S. GAAP, requiring estimates and assumptions that could significantly affect reported amounts[205]. - The valuation of goodwill and intangible assets is considered a critical accounting estimate, with annual impairment reviews conducted during the fourth fiscal quarter[206]. - The impairment review process for goodwill involves assessing qualitative factors and comparing fair value to carrying amounts[207]. - Long-lived asset impairment reviews are triggered by significant underperformance or changes in business strategy, requiring subjective judgment[209]. - Recent accounting pronouncements are discussed in Note A.19 of the unaudited condensed consolidated financial statements[210]. Lease Agreements - The Company entered into a seven-year lease agreement for new office space in North Quincy, Massachusetts, with an initial base rent of approximately $21 thousand per month and annual escalations of 2.2% - 2.5%[201]. - A lease for a 6,500-square foot office space in Irvine, California commenced on January 1, 2025, with an initial base rent of approximately $17 thousand per month and annual increases of approximately 4%[202]. - Total future non-cancelable minimum lease payments amount to approximately $2,872 thousand, with the largest payment of $702 thousand due in 2026[203].