Financial Performance - Sales increased by 18.0% year-over-year to approximately $17.5 million for the three months ended June 30, 2023, compared to approximately $14.8 million for the same period in 2022[129]. - Gross profit increased by 35.0% to approximately $5.1 million, representing 29.1% of revenue for the three months ended June 30, 2023, compared to 25.4% for the same period in 2022[132]. - The company reported a net loss of approximately $838,330 for the three months ended June 30, 2023, compared to a net loss of approximately $447,443 for the same period in 2022[127]. - Sales increased by 22.8% to approximately $33.2 million for the six months ended June 30, 2023, from approximately $27.1 million for the same period in 2022[144]. - Gross profit increased by 40.0% to approximately $9.8 million, or 29.4% of revenue, for the six months ended June 30, 2023, compared to approximately $7.0 million, or 25.8% of revenue, for the same period in 2022[147]. - Net loss for the six months ended June 30, 2023, was approximately $1.5 million, compared to a net loss of approximately $1.0 million for the same period in 2022[154]. Revenue Composition - Program clients accounted for 81.6% of total revenue for the three months ended June 30, 2023, compared to 86.9% for the same period in 2022[120]. - Recurring organic sales increased by 11.1%, or approximately $1.4 million, to approximately $14.4 million for the three months ended June 30, 2023[130]. - Recurring organic sales increased by 13.9%, or approximately $3.4 million, to approximately $27.8 million for the six months ended June 30, 2023, compared to approximately $24.4 million for the same period in 2022[145]. Expenses - Cost of sales increased by 12.2% to approximately $12.4 million for the three months ended June 30, 2023, from approximately $11.0 million for the same period in 2022[131]. - General and administrative expenses rose to approximately $6.4 million for the three months ended June 30, 2023, compared to approximately $4.2 million for the same period in 2022[127]. - Operating expenses increased by 50.1%, or approximately $2.1 million, to approximately $6.4 million for the three months ended June 30, 2023, compared to $4.2 million for the same period in 2022[133]. - Operating expenses for the six months ended June 30, 2023, increased by 50.6%, or approximately $4.2 million, to approximately $12.4 million from approximately $8.3 million for the same period in 2022[148]. Assets and Equity - Total assets as of June 30, 2023, were approximately $63.1 million, with total stockholders' equity of approximately $38.0 million[122]. - As of June 30, 2023, the company had cash and cash equivalents of approximately $15.3 million and investments of approximately $10.3 million[156]. Cash Flow - Net cash provided by operating activities was approximately $2.3 million for the six months ended June 30, 2023, compared to a net cash used of approximately $2.2 million for the same period in 2022[159]. - Net cash used in investing activities was approximately $1.7 million for the six months ended June 30, 2023, compared to approximately $0.7 million for the same period in 2022[160]. - Net cash used in financing activities was approximately $0.6 million for the six months ended June 30, 2023, down from approximately $1.1 million for the same period in 2022[161]. Acquisitions - The company completed acquisitions contributing approximately $3.1 million, or 17.8% of sales, for the second quarter of 2023[121]. - The company acquired Wildman Imprints for a total purchase price of $2,937,222, which includes $649,433 in inventory, $34,099 in property and equipment, and $2,253,690 for the customer list[180]. - The G.A.P. Promotions acquisition had an aggregate purchase price of $3,245,872, with $91,096 in inventory, $879,486 in working capital, and $2,275,290 for the customer list[185]. - The Trend Brand Solutions acquisition totaled $2,193,166, including $63,624 in cash, $346,822 in accounts receivable, and $1,659,831 for the customer list[192]. - The Premier NYC acquisition had an aggregate purchase price of $1,390,533, with $13,855 in cash and $1,032,600 in contingent earn-out liability[197]. - The T R Miller acquisition involved a total cash payment of $2,154,230.21, with a purchase price of $1,000,000 adjusted by a $1,123,071.82 working capital adjustment[199]. Financing and Credit - The company entered into a Revolving Demand Line of Credit Loan Agreement for aggregate loans of up to $7 million, secured by a first priority security interest in all assets[165]. - The Line of Credit is subject to interest at the prime rate plus 0.5% per annum, with monthly interest repayments required[167]. - The company must maintain a minimum net worth of $3.5 million by December 31, 2023, as part of the financial requirements under the Line of Credit[172]. - The company has not drawn any funds from the Line of Credit as of June 30, 2023[177]. Future Outlook - The company expects to continue leveraging technology and expanding product offerings to enhance competitive positioning in the market[127]. - The company may require additional cash resources in the future due to changing business conditions or strategic expansions[157]. Tax and Compliance - The effective tax rate is expected to remain similar to the federal tax rate of 21%, with state income taxes fluctuating based on annual sales apportionment[152]. - The company evaluates its uncertain tax positions quarterly, which may affect its tax provision[224]. - The company has no off-balance sheet arrangements that could affect its financial condition[211]. Lease Obligations - Future minimum lease payments total $1,523,396 from 2024 to 2028, with the highest payment of $501,393 in 2024[208]. - The company anticipates no deficiencies in its ability to meet future lease payment obligations[208]. Revenue Recognition - The company recognizes revenue when goods or services are transferred to customers, following ASC Topic 606[218]. - Stock-based compensation is recorded under ASC Topic 718, with estimates based on historical data and expected volatility[220].
Stran & pany(SWAG) - 2023 Q2 - Quarterly Report