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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K/A
(Amendment
No. 1)
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): June 1, 2023
STRAN
& COMPANY, INC. |
(Exact
name of registrant as specified in its charter) |
Nevada |
|
001-41038 |
|
04-3297200 |
(State
or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(IRS
Employer
Identification No.) |
2 Heritage Drive, Suite 600, Quincy, MA |
|
02171 |
(Address
of principal executive offices) |
|
(Zip
Code) |
800-833-3309 |
(Registrant’s
telephone number, including area code) |
|
(Former
name or former address, if changed since last report) |
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
| ☐ | Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Common Stock, par value $0.0001 per share |
|
SWAG |
|
The
NASDAQ Stock Market LLC |
Warrants, each warrant exercisable for one share of Common Stock at an exercise price of $4.81375 |
|
SWAGW |
|
The NASDAQ Stock Market LLC |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2
of the Securities Exchange Act of 1934.
Emerging
Growth Company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Explanatory
Note:
On
June 1, 2023, Stran & Company, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original 8-K”)
reporting the completion of the previously announced purchase of substantially all the assets of T R Miller Co., Inc., a Massachusetts
corporation (“T R Miller”). In that filing, the Company indicated that it would amend the Original 8-K at a later date to
include any financial statements and any pro forma financial information required by Item 9.01 of Form 8-K. This amendment to the Original
8-K is being filed to provide such financial statements and financial information, which are attached to this report as Exhibit 99.1,
Exhibit 99.2, Exhibit 99.3, and Exhibit 99.4. The disclosure contained in Item 2.01 of the Original 8-K is repeated below for convenience.
No other changes have been made to the Original 8-K except to remove Item 7.01 and related disclosure regarding a press release that
was issued in connection with the completion of the acquisition of substantially all the assets of T R Miller.
Item 2.01
Completion of Acquisition or Disposition of Assets.
As
previously disclosed in its Current Report on Form 8-K filed on January 31, 2023 (the “Prior Form 8-K”), on January 25, 2023,
Stran & Company, Inc. (the “Company”) entered into an Asset Purchase Agreement (the “Purchase Agreement”)
with T R Miller Co., Inc., a Massachusetts corporation (“T R Miller”), and Thomas R. Miller (the “Miller Stockholder”),
pursuant to which the Company agreed to acquire substantially all of the assets of T R Miller used in T R Miller’s branding, marketing
and promotional products and services business (the “T R Miller Business”). The T R Miller Business has existing operations
and has generated revenues. As previously reported, the Purchase Agreement provided that the aggregate purchase price (“Purchase
Price”) for the T R Miller Business would consist of cash payments by the Company to T R Miller at and following the consummation
of the transactions contemplated by the Purchase Agreement (the “Closing”), subject to certain adjustments, as described
in the Prior Form 8-K.
On
June 1, 2023, the Closing was completed. Pursuant to the Purchase Agreement, the Company paid T R Miller $2,154,230.21 in cash, reflecting
the purchase price of $1,000,000 as adjusted by a $1,123,071.82 working capital adjustment; no adjustment for indebtedness as of the
date and time of the Closing (the “Closing Date”) that was not part of the Assumed Liabilities (as defined in the Purchase
Agreement); no separate amount for any Inventory (as defined in the Purchase Agreement) that was on hand and owned by Seller as of the
Closing Date, as such amount was included in the working capital adjustment; and first and last month’s rent under the Lease Agreement
(as defined below) of $14,962.50 and $16,195.89, respectively.
Following
the Closing, the Company will make (a) installment payments equal to (i) $400,000 on the first anniversary of the Closing Date, (ii)
$300,000 on the second anniversary of the Closing Date, (iii) $200,000 on the third anniversary of the Closing Date, and (iv) $200,000
on the fourth anniversary of the Closing Date, each such installment payment subject to adjustment for certain uncollected accounts receivable
amounts outstanding after the first 12 months following the Closing; and (b) four annual payments (the “Earn Out Payments”),
each equal to (i) 45% of the annual Gross Profit (as defined in the Purchase Agreement) of T R Miller above $4,000,000 with respect to
certain customers of T R Miller or primarily resulting from the efforts of the Stockholder or certain employees or independent contractors
of T R Miller, plus (ii) 25% of the annual Gross Profit above $4,000,000 with respect to customers primarily resulting from the past
or future efforts of the Buyer that are assigned to and primary responsibility of any employee or independent contractor of T R Miller
as designated by the Purchase Agreement, for the trailing 12-month period, as of the first, second, third, and fourth anniversary of
the Closing Date, each such Earn Out Payment subject to adjustment as set forth in the Purchase Agreement.
The
timing and manner of the remaining working capital adjustments or payments and the Earn Out Payments, and the resolution of any disagreements
as to such adjustments or payments, will follow the procedures provided by the Purchase Agreement.
In
addition, as of the Closing Date, the Company undertook to perform or otherwise pay, satisfy and discharge as of the Closing the Assumed
Liabilities (as defined in the Purchase Agreement).
The
Purchase Agreement also contained additional representations, warrants, covenants, indemnification provisions and other terms which are
described in the Prior Form 8-K.
Pursuant
to the Purchase Agreement, in connection with the Closing, the Company, as tenant, and Miller Family Walpole LLC, as landlord (the “Landlord”),
entered into a lease agreement for a warehouse facility used by the T R Miller Business, dated May 31, 2023 (the “Lease Agreement”).
The Lease Agreement provides for base rent of $179,550.00 in the first year of the lease and an increase of 2% per annum in each subsequent
year. We may extend the term for an additional five years upon the same base rent terms upon 12 months’ notice. We will be responsible
for all property and other taxes and expenses related to the facility except for maintenance of certain structural elements. The initial
lease term commenced on June 1, 2023 and terminates on May 31, 2028. We may assign our rights to the lease and property at the facility
as collateral to a lender. The Landlord is also required to execute a landlord lien waiver and collateral access agreement upon request.
The Lease Agreement contains provisions for minimum insurance, mutual indemnification from certain claims relating to the Lease Agreement,
and customary default and related termination and remedy provisions. The foregoing description of the lease agreement is qualified in
its entirety by reference to the full text of the agreement, a copy of which is filed as Exhibit 10.1 to this Current Report.
In
addition, the Company entered into (i) a consulting agreement with the Miller Stockholder providing for certain consulting services to
the Company for a period of three years following the Closing Date and (ii) an employment agreement with Stacy Miller.
The
foregoing references to the terms and conditions of the Purchase Agreement do not purport to be complete and are qualified in their entirety
by reference to the Prior Form 8-K, and to the full text of the agreement attached to the Prior Form 8-K and to this report as Exhibit
2.1, and which is incorporated herein by reference.
There
were no material relationships, other than in respect of the transaction, between T R Miller, the Miller Stockholder, and the Company
or any of the Company’s affiliates, including any director or officer of the Company, or any associate of any director or officer
of the Company.
Item 9.01 Financial Statements and Exhibits.
(a)
Financial statements of businesses or funds acquired.
The
audited financial statements of T R Miller as of and for the year ended June 30, 2022, the related notes, and the report of the independent
auditor with respect thereto, are attached hereto as Exhibit 99.1 and incorporated by reference herein.
The
unaudited condensed interim financial statements of T R Miller, consisting of the unaudited condensed balance sheet as of March 31, 2023
and the related unaudited condensed statement of operations and retained earnings for the nine months ended March 31, 2023 are attached
hereto as Exhibit 99.2 and incorporated by reference herein.
(b)
Pro forma financial information.
The
unaudited pro forma condensed combined balance sheet of the Company and T R Miller as of December 31, 2022, the unaudited pro forma condensed
combined statement of income of the Company and T R Miller for the 12 months ended December 31, 2022, and the related notes to the unaudited
pro forma condensed combined financial information, are attached hereto as Exhibit 99.3 and incorporated by reference herein.
The
unaudited pro forma condensed combined balance sheet of the Company and T R Miller as of March 31, 2023, the unaudited pro forma condensed
combined statement of income of the Company and T R Miller for the three months ended March 31, 2023, and the related notes to the unaudited
pro forma condensed combined financial statements, are attached hereto as Exhibit 99.4 and incorporated by reference herein.
(d)
Exhibits
Exhibit
No. |
|
Description
of Exhibit |
2.1 |
|
Asset Purchase Agreement, dated as of January 25, 2023, by and among Stran & Company, Inc., T R Miller Co., Inc. and Thomas R. Miller (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on January 31, 2023) |
10.1 |
|
Land and Building Lease Agreement, dated May 31, 2023, between Miller Family Walpole LLC and Stran & Company, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 1, 2023) |
23.1 |
|
Consent
of BF Borgers CPA PC |
99.1 |
|
The
audited financial statements of T R Miller Co., Inc. as of and for the year ended June 30, 2022, the related notes, and the report
of the independent auditor with respect thereto |
99.2 |
|
The
unaudited condensed interim financial statements of T R Miller Co., Inc., consisting of the unaudited condensed balance sheet as
of March 31, 2023 and the related unaudited condensed statement of operations for the nine months ended March 31, 2023 |
99.3 |
|
The
unaudited pro forma condensed combined balance sheet of Stran & Company, Inc. and T R Miller Co., Inc. as of December 31, 2022,
and the unaudited pro forma combined condensed statement of income for the 12 months ended December 31, 2022, and the related notes
to the unaudited pro forma condensed combined financial statements |
99.4 |
|
The unaudited pro forma combined condensed balance sheet of Stran & Company, Inc. and T R Miller Co., Inc. as of March 31, 2023, the unaudited pro forma condensed combined statement of income for the three months ended March 31, 2023, and the related notes to the unaudited pro forma condensed combined financial statements |
104 |
|
Cover
Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date:
August 17, 2023 |
STRAN
& COMPANY, INC. |
|
|
|
/s/
Andrew Shape |
|
Name: |
Andrew Shape |
|
Title: |
President and Chief Executive Officer |
5
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM
We consent to the inclusion in this Current Report
on Form 8-K and the incorporation by reference in the Registration Statement on Form S-3 (File No. 333-271337) and the Registration Statement
on Form S-8 (File No. 333-261050) of Stran & Company, Inc. of our report dated August 17, 2023, with respect to our audits of the
financial statements of T R Miller Co., Inc., which comprise the balance sheet as of June 30, 2022, and the results of its operations
and its cash flows for the fiscal year ended June 30, 2022 in accordance with accounting principles generally accepted in the United States
of America.
/s/ BF Borgers CPA PC |
|
BF Borgers CPA PC (PCAOB ID 5041)
Lakewood, CO |
|
August 17, 2023 |
|
Exhibit 99.1
T R
MILLER CO., INC.
AUDITED
financial statements
YEAR
ENDED JUNE 30, 2022
Report of Independent Registered Public Accounting
Firm
To the shareholders and the board of directors
of T R Miller Co., Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet
of T R Miller Co., Inc. (the “Company”) as of June 30, 2022, the related statement of operations, stockholders’ equity
(deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30,
2022, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally
accepted in the United States.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s BF Borgers CPA PC
BF Borgers CPA PC (PCAOB ID 5041)
We have served as the Company’s auditor since
2023
Lakewood, CO
August 17, 2023
T R MILLER CO., INC.
BALANCE SHEET
JUNE 30, 2022
ASSETS | |
| |
Current Assets | |
| |
Cash | |
$ | 2,066,838 | |
Accounts Receivable, Net | |
| 2,568,639 | |
Deposits | |
| 29,902 | |
Due from Stockholders, Current | |
| 350,000 | |
Inventory | |
| 683,719 | |
Note Receivable, Current | |
| 3,351 | |
Prepaid Expenses | |
| 31,001 | |
Total Current Assets | |
| 5,733,450 | |
| |
| | |
Property and Equipment | |
| | |
Leasehold Improvements | |
| 192,299 | |
Furniture and Fixtures | |
| 624,198 | |
Vehicles | |
| 213,220 | |
| |
| 1,029,717 | |
Accumulated Depreciation | |
| (890,543 | ) |
Total Property and Equipment | |
| 139,174 | |
| |
| | |
Other Assets | |
| | |
Due from Stockholders, Net of Current Portion | |
| 702,781 | |
Note Receivable, Net of Current Portion | |
| 71,829 | |
Total Other Assets | |
| 774,610 | |
TOTAL ASSETS | |
$ | 6,647,234 | |
| |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | |
Current Liabilities | |
| | |
Accounts Payable and Accrued Expenses | |
$ | 467,332 | |
Accrued Payroll and Related | |
| 351,823 | |
Corporate Tax Payable | |
| 68,282 | |
Unearned Revenue | |
| 950,079 | |
Due to Stockholders | |
| 37,805 | |
Sales Tax Payable | |
| 83,355 | |
Total Current Liabilities | |
| 1,958,676 | |
| |
| | |
Stockholders’ Equity | |
| | |
Common Stock, No Par Value, 12,500 Shares Authorized, 4,000 Shares Issued and Outstanding | |
| 8,830 | |
Retained Earnings | |
| 4,679,728 | |
Total Stockholders’ Equity | |
| 4,688,558 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | |
$ | 6,647,234 | |
The accompanying notes are an integral part
of these financial statements.
T R MILLER CO., INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED JUNE 30, 2022
SALES | |
$ | 20,373,324 | |
| |
| | |
COST OF SALES | |
| | |
Purchases | |
| 13,023,014 | |
Freight | |
| 1,644,134 | |
Total Cost Of Sales | |
| 14,667,148 | |
| |
| | |
GROSS PROFIT | |
| 5,706,176 | |
| |
| | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |
| 4,513,844 | |
| |
| | |
EARNINGS FROM OPERATIONS | |
| 1,192,332 | |
| |
| | |
OTHER INCOME (EXPENSE) | |
| | |
Interest Income (Expense), Net | |
| 24,626 | |
Gain on Sale of Fixed Asset | |
| 33,118 | |
Other Income (Expense) | |
| (29,011 | ) |
Total Other Income | |
| 28,733 | |
| |
| | |
EARNING BEFORE INCOME TAXES | |
| 1,221,065 | |
| |
| | |
INCOME TAXES | |
| | |
Federal | |
| 171,998 | |
State | |
| 73,264 | |
| |
| 245,262 | |
| |
| | |
NET EARNINGS | |
| 975,803 | |
| |
| | |
RETAINED EARNINGS, BEGINNING | |
| 3,703,925 | |
RETAINED EARNINGS, ENDING | |
$ | 4,679,728 | |
The accompanying notes are an integral part
of financial statements.
T R MILLER CO., INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2022
CASH FLOW FROM OPERATING ACTIVITIES | |
| |
Net Earnings | |
$ | 975,803 | |
Noncash Items Included in Net Earnings: | |
| | |
Depreciation and Amortization | |
| 24,389 | |
(Increase) Decrease in: | |
| | |
Accounts Receivable, Net | |
| (787,822 | ) |
Deposits | |
| (24,239 | |
Inventory | |
| 85,740 | |
Prepaid Expenses | |
| (3,565 | ) |
Prepaid Income Taxes | |
| 176,980 | |
Notes Receivable | |
| 17,349 | |
Increase (Decrease) in: | |
| | |
Accounts Payable and Accrued Expenses | |
| (826,634 | ) |
Accrued Payroll and Related | |
| 184,836 | |
Corporate Tax Payable | |
| 68,282 | |
Deferred Revenue | |
| 485,731 | |
Sales Tax Payable | |
| (63,595 | ) |
Net Cash Provided By Operating Activities | |
| 313,255 | |
| |
| | |
CASH FLOW FROM INVESTING ACTIVITIES | |
| | |
Additions to Property and Equipment | |
| (66,625 | ) |
Property Disposed, Net | |
| 25,790 | |
Net Cash Used By Investing Activities | |
| (40,835 | ) |
| |
| | |
CASH FLOW FROM FINANCING ACTIVITIES | |
| | |
Payment of Long-Term Debt | |
| (44,805 | ) |
| |
| | |
NET INCREASE IN CASH | |
| 227,615 | |
| |
| | |
CASH AT BEGlNNlNG OF YEAR | |
$ | 1,839,223 | |
CASH AT END OF YEAR | |
$ | 2,066,838 | |
| |
| | |
SUPPLEMENTAL DISCLOSURES: | |
| | |
Interest Paid | |
$ | 24,626 | |
Income Taxes Paid | |
$ | - | |
The accompanying notes are an integral part
of these financial statements.
T R MILLER CO., INC.
NOTES TO THE FINANCIAL STATEMENTS
| A. | ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES: |
| 1. | Organization – T R Miller Co.,
Inc., (the Company) was incorporated under the laws of the Commonwealth of Massachusetts
and commenced operations on August 5, 1980. |
| 2. | Operations - The Company is an outsourced
marketing solutions provider that sells branded products to customers. The Company purchases
products and branding through various third-party manufacturers and decorators and resells
the finished goods to customers. |
| 3. | Method of Accounting - The Company’s
financial statements are prepared using the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America. (“U.S. GAAP”). |
| 4. | Cash and Cash Equivalents - For purposes
of the statement of cash flows, the Company considers all highly liquid investments with
an initial maturity of three months or less to be cash equivalents. |
| 5. | Concentration of Credit Risk - Financial
instruments that potentially subject the Company to concentrations of credit risk consist
primarily of accounts receivable and deposits in excess of federally insured limits. These
risks are managed by performing ongoing credit evaluations of customers’ financial
condition and by maintaining all deposits in high quality financial institutions. |
| 6. | Inventory - Inventory consists of finished goods (branded products)
and goods in process (un-branded products awaiting decoration). All inventory is stated at
the lower of cost (first-in, first-out method) or net realizable value. |
| 7. | Property and Equipment - Property and
equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred
whereas major betterments are capitalized. Depreciation is provided using straight-line and
accelerated methods over five years. |
| 8. | Fair Value of Financial Instruments -
The Company’s financial instruments include cash and cash equivalents, accounts receivable,
note receivable, accounts payable and accrued expenses. The recorded values of cash and cash
equivalents, accounts receivable, accounts payable, and accrued expenses approximate their
fair values based on their short-term nature. |
| 9. | Revenue Recognition - In May 2014, the
Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”),
which is aimed at creating common revenue recognition guidance for GAAP and the International
Financial Reporting Standards (“IFRS”). This new guidance provides a comprehensive
model for entities to use in accounting for revenue arising from contracts with customers
and supersedes most current revenue guidance issued by the FASB. ASU 2014-09 also requires
both qualitative and quantitative disclosures, including descriptions of performance obligations. |
On January 1, 2019, the Company adopted
ASU 2014-09 and all related amendments (“ASC 606”) and applied its provisions to all uncompleted contracts using the modified
retrospective basis. The application of this new revenue recognition standard resulted in no adjustment to the opening balance of retained
earnings.
Performance Obligations
- Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by transferring
goods or services to customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good
or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied
at a point in time is recognized at the point in time that the company determines the customer has obtained control over the promised
good or service. The amount of revenue recognized reflects the consideration of which the Company expects to be entitled in exchange
for the promised goods or services.
The following provides detailed information
on the recognition of the Company’s revenue from contracts with customers:
Product Sales - The Company
is engaged in the development and sale of promotional programs and products. Revenue on the sale of these products is recognized after
orders are shipped.
All revenue performance obligations
are satisfied at a point in time.
| 10. | Freight - The Company includes freight
charges as a component of cost of goods sold. |
| 11. | Uncertainty in Income and Other Taxes
- The Company adopted the standards for Accounting for Uncertainty in Income Taxes
(income, sales, use, and payroll), which required the Company to report any uncertain tax
positions and to adjust its financial statements for the impact thereof. As of June 30, 2022,
the Company determined that it had no tax positions that did not meet the “more likely
than not” threshold of being sustained by the applicable tax authority. The Company
files tax and information returns in the United States Federal, Massachusetts, and other
state jurisdictions. These returns are generally subject to examination by tax authorities
for the last three years. |
| 12. | Income Taxes - Income taxes are provided
for the tax effects of transactions reported in the financial statements and consist of taxes
currently due plus deferred taxes. Deferred taxes are provided for differences between the
basis of assets and liabilities for financial statements and income tax purposes. The Company
has historically utilized accelerated tax depreciation to minimize federal income taxes. |
| 13. | Sales Tax - Sales tax collected from
customers is recorded as a liability, pending remittance to the taxing jurisdiction. Consequently,
sales taxes have been excluded from revenues and costs. The Company remits sales and use
to Massachusetts and to other state jurisdictions, respectively. |
| 14. | Effective July 1, 2021, the Company
adopted early implemented Accounting Standards Update (ASU) 2016-02, Leases (ASC Topic 842)
and subsequent amendments. ASC 842 affects all companies that enter into lease arrangements,
with certain exclusions under limited scope limitations. Under ASU 2016-02, an entity recognizes
right-of-use assets and lease obligations on its balance sheet for all leases with a lease
term of more than 12 months. Short-term rentals under year-to-year leases or remaining lease
terms of 12 months or less are exempt from being capitalized. As of June 30, 2022, the Company
did not hold any leases with a term greater than 12 months. See Note G for short-term lease
arraignments. |
| 15. | Use of Estimates - The preparation of
financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates. |
| B. | ALLOWANCE FOR DOUBTFUL ACCOUNTS: |
The Company uses the allowance method
to account for uncollectible accounts receivable balances. Under the allowance method, an estimate of uncollectible customer balances
is made based on the Company’s prior history and other factors such as credit quality of the customer and economic conditions of
the market. Based on these factors, at June 30, 2022, there was an allowance for doubtful accounts of $9,000.
The Company has multiple loans to
stockholders with various payment terms. At June 30, 2022 the total amount due from stockholders was $1,052,781.
The amounts due from the stockholders
are unsecured and non-interest bearing. There is no formal repayment plan and, accordingly, this amount has been recorded as long-term.
At June 30, 2022, the amount due from stockholder was $702,782.
The amounts due from the stockholder
are unsecured and accrue interest at a rate of 1.91% per annum. The amount due from stockholders is repaid in monthly interest payments
of $557 with a balloon payment in 2023. At June 30, 2022, the current portion due from stockholder was $350,000.
Inventory consists of the following
as of June 30, 2022:
Finished Goods (Branded) | |
$ | 430,767 | |
Goods in Process (Un-branded) | |
| 252,952 | |
| |
$ | 683,719 | |
The note receivable is unsecured and
accrues interest at a rate of 3.32% per annum. The note receivable is repaid in monthly payments of $483. At June 30, 2022, the current
portion of the note receivable was $3,351. At June 30, 2022, the long-term portion of the note receivable was $71,829.
Unearned revenue includes customer
deposits and deferred revenue which represent prepayments from customers. At June 30, 2022, the Company had unearned revenue totaling
$950,079.
Balance at July 1, | |
$ | 464,349 | |
Revenue recognized | |
| (20,295,394 | ) |
Amounts collected or invoiced | |
| 20,781,124 | |
Unearned Revenue | |
$ | 950,079 | |
| G. | Operating
Leases - Related party: |
The Company leases certain facilities
from related parties as a tenant-at-will. For the year ended June 30, 2022, total rent expense paid and charged to operations amounted
to $184,650.
The determination has been made that
a variable interest does not exist between the Company and these affiliates. Accordingly, the financial results included in the accompanying
combined financial statements do not include any financial results related to these affiliates.
The Company follows the policy of
charging the costs of advertising to expense as incurred. For the year ended June 30, 2022, advertising costs amounted to $13,198.
For the year ended June 30, 2022,
the Company had no major customers.
| J. | EMPLOYEE
BENEFIT PROGRAM: |
Effective July 1985, the Company has
a discretionary profit-sharing retirement plan covering all employees who meet certain requirements. Employer contributions accrued and
charged to this plan for the year ended June 30, 2022 amounted to zero.
Management has evaluated events occurring after the balance sheet
date through August 17, 2023, the date in which the financial statements were available to be issued.
8
Exhibit 99.2
T R MILLER CO., INC.
BALANCE SHEET
MARCH 31, 2023
ASSETS | |
| |
Current Assets | |
| |
Cash | |
$ | 2,432,941 | |
Accounts Receivable, Net | |
| 1,373,822 | |
Deposits | |
| 6,940 | |
Due from Stockholders, Current | |
| 350,000 | |
Inventory | |
| 232,273 | |
Note Receivable, Current | |
| 3,241 | |
Prepaid Corporate Taxes | |
| 135,126 | |
Prepaid Expenses | |
| 8,909 | |
Total Current Assets | |
| 4,543,252 | |
| |
| | |
Property and Equipment, net: | |
| 145,671 | |
| |
| | |
Other Assets: | |
| | |
Due from Stockholders, Net of Current Portion | |
| 702,781 | |
Note Receivable, Net of Current Portion | |
| 69,718 | |
| |
| 772,499 | |
Total Assets | |
$ | 5,461,422 | |
| |
| | |
Liabilities and Stockholders’ Equity | |
| | |
| |
| | |
Current Liabilities | |
| | |
Accounts Payable and Accrued Expenses | |
$ | 301,988 | |
Accrued Payroll and Related | |
| 165,279 | |
Due to Stockholder | |
| 37,805 | |
Unearned Revenue | |
| 218,622 | |
Sales Tax Payable | |
| 37,886 | |
Total Current Liabilities | |
| 761,580 | |
Total Liabilities | |
| 761,580 | |
| |
| | |
Stockholders’ Equity | |
| | |
Common Stock, No Par Value, 12,500 Shares Authorized, 4,000 Shares Issued and Outstanding | |
| 8,830 | |
Retained Earnings | |
| 4,691,012 | |
Total Stockholders’ Equity | |
| 4,699,012 | |
Total Liabilities & Stockholders’ Equity | |
$ | 5,461,422 | |
T R MILLER CO., INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
NINE MONTHS ENDED MARCH 31, 2023
SALES | |
$ | 10,967,501 | |
| |
| | |
COST OF SALES | |
| 7,706,929 | |
| |
| | |
GROSS PROFIT | |
| 3,260,572 | |
| |
| | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |
| 3,279,672 | |
| |
| | |
LOSS FROM OPERATIONS | |
| (19,100 | ) |
| |
| | |
OTHER INCOME | |
| | |
Other Income (Expense) | |
| 3,246 | |
Interest Income (Expense), Net | |
| 27,138 | |
| |
| 30,384 | |
| |
| | |
NET EARNINGS | |
$ | 11,284 | |
| |
| | |
RETAINED EARNINGS, BEGINNING | |
$ | 4,679,728 | |
RETAINED EARNINGS, ENDING | |
$ | 4,691,012 | |
Exhibit 99.3
STRAN & COMPANY, INC. AND T R MILLER CO.,
INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
AS OF AND FOR THE 12 MONTHS ENDED DECEMBER 31,
2022
| |
Stran &
Company,
Inc. | | |
T R Miller
Co., Inc. | | |
Pro Forma
Adjusting
Entries | | |
Pro Forma
Combined
Balances | |
Assets | |
| | |
| | |
| | |
| |
Current assets | |
| | |
| | |
| | |
| |
Cash | |
$ | 15,253,756 | | |
$ | 2,024,486 | | |
$ | (4,178,716 | )(a) (e) | |
$ | 13,099,526 | |
Short-Term Investments | |
| 9,779,355 | | |
| - | | |
| - | | |
| 9,779,355 | |
Accounts Receivable, Net | |
| 14,442,626 | | |
| 2,115,748 | | |
| (388,372 | )(b) | |
| 16,170,002 | |
Deposits | |
| - | | |
| 5,270 | | |
| (5,270 | )(b) | |
| - | |
Due from Stockholders, Current | |
| - | | |
| 350,000 | | |
| - | (a) | |
| 350,000 | |
Deferred Income Taxes | |
| 841,000 | | |
| - | | |
| - | | |
| 841,000 | |
Inventory | |
| 6,867,564 | | |
| 312,352 | | |
| (111,674 | ) | |
| 7,068,242 | |
Notes Receivable, Current | |
| - | | |
| 2,500 | | |
| (2,500 | )(a) | |
| - | |
Prepaid Corporate Taxes | |
| 87,459 | | |
| 51,718 | | |
| (57,718 | )(a) | |
| 87,459 | |
Prepaid Expenses | |
| 386,884 | | |
| 7,278 | | |
| (2,147 | )(b) | |
| 392,015 | |
Security Deposits | |
| 910,486 | | |
| - | | |
| - | | |
| 910,486 | |
Total current assets | |
| 48,569,130 | | |
| 4,869,352 | | |
| (4,740,397 | ) | |
| 48,698,085 | |
| |
| | | |
| | | |
| | | |
| | |
Property and Equipment, Net | |
| 1,000,090 | | |
| 151,838 | | |
| (151,838 | )(b) | |
| 1,000,090 | |
| |
| | | |
| | | |
| | | |
| | |
Other Assets | |
| | | |
| | | |
| | | |
| | |
Due from Stockholder, Net of Current Portion | |
| - | | |
| 702,781 | | |
| (702,781 | )(a) | |
| - | |
Intangible Assets - Customer Lists, Net | |
| 6,272,205 | | |
| - | | |
| 4,995,985 | (c) | |
| 11,268,190 | |
Note Receivable, Net of Current Portion | |
| - | | |
| 71,019 | | |
| (71,019 | )(a) | |
| - | |
Right of Use Asset - Office Leases | |
| 784,683 | | |
| - | | |
| - | | |
| 784,683 | |
Total Other Assets | |
| 7,056,888 | | |
| 773,800 | | |
| 4,222,185 | | |
| 3,426,070 | |
Total assets | |
$ | 56,626,108 | | |
$ | 5,835,323 | | |
$ | (710,383 | ) | |
$ | 61,751,048 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities and shareholders’ equity | |
| | | |
| | | |
| | | |
| | |
Current liabilities | |
| | | |
| | | |
| | | |
| | |
Current Portion of Contingent Earn-Out Liabilities | |
$ | 1,809,874 | | |
$ | - | | |
$ | - | (g) | |
$ | 1,809,874 | |
Current Portion of Lease Liability | |
| 324,594 | | |
| - | | |
| - | | |
| 324,594 | |
Accounts Payable and Accrued Expenses | |
| 4,051,657 | | |
| 237,693 | | |
| 149,933 | (b) | |
| 4,439,283 | |
Accrued Payroll and Related | |
| 608,589 | | |
| 299,886 | | |
| (172,516 | )(b) | |
| 735,959 | |
Due to Stockholder | |
| - | | |
| 37,805 | | |
| (37,805 | )(a) | |
| - | |
Unearned Revenue | |
| 633,148 | | |
| 340,512 | | |
| (45,394 | )(b) | |
| 928,266 | |
Rewards Program Liability | |
| 6,000,000 | | |
| - | | |
| - | | |
| 6,000,000 | |
Sales Tax Payable | |
| 365,303 | | |
| 72,852 | | |
| (72,852 | )(a) | |
| 365,303 | |
Income tax payable | |
| 162,358 | | |
| - | | |
| - | | |
| 162,358 | |
Total current liabilities | |
| 13,955,523 | | |
| 988,748 | | |
| (178,634 | ) | |
| 14,765,637 | |
| |
| | | |
| | | |
| | | |
| | |
Long-term liabilities | |
| | | |
| | | |
| | | |
| | |
Long-Term Contingent Earn-Out Liabilities | |
| 2,845,944 | | |
| - | | |
| 4,551,095 | (g) | |
| 7,397,039 | |
Long- Term Lease Liability | |
| 460,089 | | |
| - | | |
| - | | |
| 460,089 | |
Total Long-Term Liabilities | |
| 3,306,033 | | |
| - | | |
| 4,551,095 | | |
| 7,857,128 | |
Shareholders’ equity | |
| | | |
| | | |
| | | |
| | |
Common Stock | |
| 1,848 | | |
| 8,830 | | |
| (8,830 | ) | |
| 1,848 | |
Additional Paid-In Capital | |
| 38,279,151 | | |
| - | | |
| - | | |
| 38,279,151 | |
Retained Earnings | |
| 1,083,553 | | |
| 4,797,412 | | |
| (4,797,412 | ) | |
| 1,083,553 | |
Total Stockholders’ Equity | |
| 39,364,552 | | |
| 4,846,575 | | |
| (4,846,575 | ) | |
| 39,364,552 | |
Total Liabilities and Stockholders’ equity | |
$ | 56,626,108 | | |
$ | 5,835,323 | | |
$ | (474,114 | ) | |
$ | 61,987,317 | |
| |
Stran &
Company,
Inc. | | |
T R Miller
Co., Inc. | | |
Pro Forma
Adjustments | | |
Pro Forma
Combined
Balances | |
Sales | |
$ | 58,953,467 | | |
$ | 19,320,747 | | |
$ | - | | |
$ | 78,274,214 | |
Cost of Sales | |
| 42,383,793 | | |
| 13,778,785 | | |
| - | | |
| 56,162,578 | |
Gross profit | |
| 16,569,674 | | |
| 5,541,962 | | |
| | | |
| 22,111,636 | |
Operating Expenses | |
| 18,075,369 | | |
| 4,532,784 | | |
| 555,110 | (f) | |
| 23,163,263 | |
Earnings (Loss) from Operations | |
| (1,505,695 | ) | |
| 1,009,178 | | |
| (555,110 | ) | |
| (1,051,627 | ) |
Other Income and (Expense) | |
| | | |
| | | |
| | | |
| | |
Other Income (Expense) | |
| 112,507 | | |
| (33,153 | ) | |
| - | | |
| 79,354 | |
Interest Income (Expense) | |
| 94,680 | | |
| 40,093 | | |
| - | | |
| 134,773 | |
Unrealized Gain (Loss) on Short-Term Investments | |
| (179,120 | ) | |
| - | | |
| - | | |
| (179,120 | ) |
| |
| 28,067 | | |
| 6,940 | | |
| | | |
| 35,007 | |
Earnings (Loss) Before Income Taxes | |
| (1,477,628 | ) | |
| 1,016,118 | | |
| (555,110 | ) | |
| (1,016,620 | ) |
Provision for Income Taxes | |
| (699,187 | ) | |
| 245,262 | | |
| - | | |
| (453,925 | ) |
Net Earnings (Loss) | |
| (778,441 | ) | |
| 770,856 | | |
| (551,110 | ) | |
| (562,695 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net Earnings (Loss) Per Share - Basic & Diluted | |
$ | (0.04 | ) | |
$ | - | | |
$ | - | | |
$ | (0.03 | ) |
Weighted-Average Shares Outstanding - Basic & Diluted | |
| 19,202,619 | | |
| | | |
| | | |
| 19,202,619 | |
Exhibit 99.4
STRAN & COMPANY, INC. AND T R MILLER CO.,
INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31,
2023
| |
Stran &
Company,
Inc. | | |
T R Miller
Co., Inc. | | |
Pro Forma
Adjusting
Entries | | |
Pro Forma
Combined
Balances | |
Assets | |
| | |
| | |
| | |
| |
Current assets | |
| | |
| | |
| | |
| |
Cash and cash equivalents | |
$ | 10,596,595 | | |
$ | 2,432,941 | | |
$ | (4,587,171 | )(a) (e) | |
$ | 8,442,365 | |
Short Term Investments | |
| 10,269,101 | | |
| - | | |
| - | | |
| 10,269,101 | |
Accounts Receivable, Net | |
| 11,914,586 | | |
| 1,373,822 | | |
| 353,554 | (b) | |
| 13,641,962 | |
Deposits | |
| | | |
| 6,940 | | |
| (6,940 | )(b) | |
| - | |
Due from Stockholders, Current | |
| - | | |
| 350,000 | | |
| (350,000 | )(a) | |
| - | |
Deferred Income Taxes | |
| 1,205,000 | | |
| - | | |
| - | | |
| 1,205,000 | |
Inventory | |
| 5,665,924 | | |
| 232,273 | | |
| (31,595 | ) | |
| 5,866,602 | |
Notes Receivable, Current | |
| - | | |
| 3,241 | | |
| (3,241 | )(a) | |
| - | |
Prepaid Corporate Taxes | |
| 87,459 | | |
| 135,126 | | |
| (135,126 | )(a) | |
| 87,459 | |
Prepaid Expenses | |
| 611,320 | | |
| 8,909 | | |
| (3,778 | )(b) | |
| 616,451 | |
Security Deposits | |
| 1,172,754 | | |
| - | | |
| - | | |
| 1,172,754 | |
Total Current Assets | |
| 41,522,739 | | |
| 4,543,252 | | |
| (4,764,297 | ) | |
| 41,301,694 | |
| |
| | | |
| | | |
| | | |
| | |
Property and Equipment, Net | |
| 1,193,356 | | |
| 145,671 | | |
| (145,671 | )(b) | |
| 1,193,356 | |
| |
| | | |
| | | |
| | | |
| | |
Other Assets | |
| | | |
| | | |
| | | |
| | |
Due from Stockholders, Net of Current Portion | |
| - | | |
| 702,781 | | |
| (702,781 | )(a) | |
| - | |
Intangible Assets, Net | |
| 5,654,804 | | |
| - | | |
| 4,857,208 | (c) | |
| 10,512,012 | |
Note Receivable, Net of Current Portion | |
| - | | |
| 69,718 | | |
| - | (a) | |
| 69,718 | |
Right of Use Asset - Office Leases | |
| 775,742 | | |
| - | | |
| - | | |
| 775,742 | |
Total Other Assets | |
| 6,430,546 | | |
| 772,499 | | |
| 4,154,427 | | |
| 11,357,472 | |
Total Assets | |
$ | 49,146,641 | | |
$ | 5,461,222 | | |
$ | (795,874 | ) | |
$ | 53,852,522 | |
Liabilities and shareholders’ equity | |
| | | |
| | | |
| | | |
| | |
Current liabilities | |
| | | |
| | | |
| | | |
| | |
Current Portion of Contingent Earn-Out Liabilities | |
$ | 2,171,603 | | |
$ | - | | |
$ | - | (g) | |
$ | 2,171,603 | |
Current Portion of Lease Liability | |
| 320,197 | | |
| - | | |
| - | | |
| 320,197 | |
Accounts Payable and Accrued Expenses | |
| 2,938,995 | | |
| 301,988 | | |
| 85,638 | (b) | |
| 3,326,621 | |
Accrued Payroll and Related | |
| 674,123 | | |
| 165,279 | | |
| (37,909 | )(b) | |
| 801,493 | |
Due to Stockholder | |
| - | | |
| 37,805 | | |
| (37,805 | )(a) | |
| - | |
Unearned Revenue | |
| 1,871,846 | | |
| 218,622 | | |
| 76,496 | (b) | |
| 2,166,964 | |
Rewards Program Liability | |
| - | | |
| - | | |
| - | | |
| - | |
Sales Tax Payable | |
| 259,633 | | |
| 37,886 | | |
| (37,886 | )(a) | |
| 259,633 | |
Notes Payable - Wildman | |
| 162,358 | | |
| - | | |
| - | | |
| 162,358 | |
Total Current Liabilities | |
| 8,398,755 | | |
| 761,580 | | |
| 48,534 | | |
| 9,208,869 | |
Long-Term Liabilities | |
| | | |
| | | |
| | | |
| | |
Long-Term Contingent Earn-Out Liabilities | |
| 1,594,944 | | |
| - | | |
| 4,551,095 | (g) | |
| 6,146,039 | |
Long- Term Lease Liability | |
| 455,545 | | |
| - | | |
| - | | |
| 455,545 | |
Total Long-Term Liabilities | |
| 2,050,489 | | |
| - | | |
| 4,551,095 | | |
| 6,601,584 | |
Stockholders’ equity | |
| | | |
| | | |
| | | |
| | |
Common Stock | |
| 1,849 | | |
| 8,830 | | |
| (8,830 | ) | |
| 1,849 | |
Additional Paid-In Capital | |
| 38,306,533 | | |
| - | | |
| - | | |
| 38,306,533 | |
Retained Earnings | |
| 389,015 | | |
| 4,691,012 | | |
| (4,691,012 | ) | |
| 389,015 | |
Total Stockholders’ Equity | |
| 38,697,397 | | |
| 4,699,012 | | |
| (4,740,175 | ) | |
| 38,697,397 | |
Total Liabilities and Stockholders’ Equity | |
$ | 49,146,641 | | |
$ | 5,461,422 | | |
$ | (140,546 | ) | |
$ | 54,507,850 | |
| |
Stran &
Company,
Inc. | | |
T R Miller
Co., Inc. | | |
Pro Forma
Adjustments | | |
Pro Forma
Combined
Balances | |
Sales | |
$ | 15,776,247 | | |
$ | 2,998,834 | | |
$ | - | | |
$ | 18,775,081 | |
Cost of Sales | |
| 11,082,294 | | |
| 2,085,521 | | |
| - | | |
| 13,167,815 | |
Gross profit | |
| 4,693,953 | | |
| 913,313 | | |
| - | | |
| 5,607,266 | |
Operating Expenses | |
| 6,079,095 | | |
| 1,025,136 | | |
| 138,777 | (f) | |
| 7,243,008 | |
Earnings (Loss) from Operations | |
| (1,385,142 | ) | |
| (111,823 | ) | |
| (138,777 | ) | |
| (1,635,742 | ) |
Other Income and (Expense) | |
| | | |
| | | |
| | | |
| | |
Other Income (Expense) | |
| 56,637 | | |
| 1,055 | | |
| - | | |
| 57,692 | |
Interest Income (Expense) | |
| 138,082 | | |
| 4,368 | | |
| - | | |
| 142,450 | |
Unrealized Gain (Loss) on Short-Term Investments | |
| 131,885 | | |
| - | | |
| - | | |
| 131,885 | |
| |
| 326,604 | | |
| 5,423 | | |
| - | | |
| 332,027 | |
Earnings (Loss) Before Income Taxes | |
| (1,058,538 | ) | |
| (106,400 | ) | |
| (138,777 | ) | |
| (1,303,715 | ) |
Provision for Income Taxes | |
| (364,000 | ) | |
| - | | |
| - | | |
| (364,000 | ) |
Net Earnings (Loss) | |
$ | (694,538 | ) | |
$ | (106,400 | ) | |
$ | (138,777 | ) | |
$ | (939,715 | ) |
Net Earnings (Loss) Per Share - Basic & Diluted | |
| (0.04 | ) | |
| | | |
| - | | |
| (0.05 | ) |
Weighted-Average Shares Outstanding - Basic & Diluted | |
$ | 18,477,604 | | |
| | | |
| | | |
$ | 18,477,604 | |
STRAN & COMPANY,
INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND MARCH 31, 2023
A. | TRANSACTION AND BASIS OF PRESENTATION: |
On May 31, 2023, Stran & Company,
Inc. (“Stran” or the “Company”) acquired substantially all the assets of
T R Miller Co., Inc., a Massachusetts Corporation (“T R Miller”). Located in
Walpole, T R Miller is a promotional products company.
The
Acquisition was consummated pursuant to an Asset Purchase Agreement, dated as of January 25, 2023 (the “Purchase Agreement”),
by and among the Company, as the purchaser, T R Miller, as the seller, and Thomas R. Miller, the majority stockholder of T R Miller.
The board of directors of the Company approved the Purchase Agreement and the transactions contemplated thereby. The purchase price for
T R Miller consisted of approximately $2.2 million in cash, $1.1 million in an installment note payable, and $3.5 million in a contingent
earn-out based off of gross profit over the next 4 years. The acquisition was effective as of June 1, 2023.
The accompanying unaudited pro forma
condensed combined balance sheet presents the historical financial position of Stran combined with T R Miller as if the acquisition had
occurred on December 31, 2022 and the unaudited pro forma condensed combined statement of income presents the combined results of Stran’s
operations with T R Miller as if the acquisition had occurred on January 1, 2022. The accompanying pro forma condensed combined financial
statements include management’s assumptions and certain adjustments described in greater detail below.
The historical consolidated financial
statements have been adjusted in the pro forma condensed combined financial statements to give effect to pro forma events that are (1)
directly attributable to the business combination, (2) factually supportable and (3) with respect to the pro forma condensed combined
statements of operations, expected to have a continuing impact on the combined results following the business combination.
The business combination was accounted
for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. As the acquirer for accounting
purposes, the Company has estimated the fair value of T R Miller’s assets acquired and liabilities assumed and conformed the accounting
policies of T R Miller to its own accounting policies.
The pro forma combined financial statements
do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisition
occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of
the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected
herein due to a variety of factors.
The unaudited pro forma condensed combined
financial information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition.
Additionally, the unaudited pro forma condensed combined financial information does not reflect additional revenue opportunities following
the acquisition. The unaudited pro forma condensed combined financial information also does not impute any on-going financing costs which
the Company may or may not incur related to the transaction.
As a result of the continuing review
of T R Miller’s accounting policies, Stran may identify differences between the accounting policies of the two businesses that,
when conformed, could have a material impact on the combined financial statements. The unaudited pro forma combined condensed financial
statements do not assume any differences in accounting policies other than as described in Note D.
C. | PURCHASE PRICE AND ALLOCATION: |
The following table sets forth the
purchase consideration paid to shareholders of T R Miller on June 1, 2023, the date of acquisition. The preliminary purchase price allocation
set forth below assumes the acquisition had closed on December 31, 2022:
Consideration paid to T R Miller’s members: | |
| |
Cash | |
$ | 2,154,230 | |
Installment Note Payable | |
| 1,100,000 | |
Contingent Earn-Out | |
| 3,451,095 | |
Total consideration | |
$ | 6,674,167 | |
| |
| | |
Preliminary purchase price allocation | |
| | |
Accounts Receivable | |
$ | 1,727,375 | |
Inventory | |
| 200,678 | |
Prepaid Expenses | |
| 5,131 | |
| |
| | |
Accounts payable | |
| (289,403 | ) |
Accrued expenses | |
| (98,223 | ) |
Accrued Commissions | |
| (127,370 | ) |
Customer Deposits | |
| (295,116 | ) |
Total tangible assets acquired and liabilities assumed | |
| 1,123,072 | |
Intangible Assets | |
| 5,551,095 | |
Total pro forma net assets acquired | |
$ | 6,674,167 | |
The final determination of the purchase
price allocation and the amount of intangible asset acquired will be based on T R Miller’s assets acquired and liabilities assumed
as of June 1, 2023, the date of acquisition.
For the purposes of this pro forma
analysis, the purchase price has been preliminarily allocated based on an estimate of the fair value of assets acquired and liabilities
assumed as of the date of acquisition. The determination of estimated fair value requires management to make significant estimates and
assumptions. The final valuation of net assets is expected to be completed as soon as possible but no later than one year from the acquisition
date. The Company will adjust its estimates as needed based upon the final valuation. The following is a summary of preliminary valuation
estimates along with management’s assumptions included in the adjustments reflected in the pro forma condensed combined financial
information:
Tangible assets and liabilities:
Tangible assets and liabilities were valued at their respective carrying amounts which management believes approximate their fair values
as of the assumed date of acquisition.
Accrued and other liabilities:
Accrued expenses were adjusted to record combined estimated transaction costs incurred. These costs were incurred after December 31, 2022,
but are included as an adjustment to accrued and other liabilities and accumulated deficit for purposes of presenting the pro forma condensed
combined balance sheet as if the transaction had occurred on December 31, 2022. These transaction expenses are not reflected in the pro
forma condensed combined statement of income for the year ended December 31, 2022, as they are not expected to have a continuing impact
on future operations.
Identifiable intangible assets:
At this time, the Company’s estimates of the fair values of intangible assets are still subject to considerable uncertainty, as
substantial amounts of T R Miller’s data must be thoroughly analyzed before more precise valuations can be determined. The Company
anticipates that these analyses will be completed during the measurement period following the closing date.
Pro forma adjustments are necessary
to reflect the consideration paid to T R Miller’s stockholders and to adjust amounts related to the tangible and intangible assets
and liabilities of T R Miller to reflect the preliminary estimate of their fair values and the impact on the combined statement of income
as if Stran and T R Miller had been combined during the periods presented. The pro forma adjustments included in the unaudited pro forma
combined financial statements are as follows:
|
(a) |
To record an adjustment to remove T R Miller assets and liabilities not included or acquired. |
|
|
|
|
(b) |
To record an adjustment to accounts to align with opening balance amounts based on preliminary fair value assessment. |
|
|
|
|
(c) |
To record intangible asset based on preliminary purchase price allocation. |
|
|
|
|
(d) |
To remove T R Miller retained earnings. |
|
|
|
|
(e) |
To record the aggregate consideration including cash payment of $2,154,230 and installment payments of $4,691,012. |
|
|
|
|
(f) |
To record an adjustment for amortization of intangibles based on purchase accounting adjustments. |
|
|
|
|
(g) |
To record the issuance of the contingent earn-out and installment note payable. |
5
v3.23.2
Cover
|
Jun. 01, 2023 |
Document Type |
8-K/A
|
Amendment Flag |
true
|
Amendment Description |
On
June 1, 2023, Stran & Company, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original 8-K”)
reporting the completion of the previously announced purchase of substantially all the assets of T R Miller Co., Inc., a Massachusetts
corporation (“T R Miller”). In that filing, the Company indicated that it would amend the Original 8-K at a later date to
include any financial statements and any pro forma financial information required by Item 9.01 of Form 8-K. This amendment to the Original
8-K is being filed to provide such financial statements and financial information, which are attached to this report as Exhibit 99.1,
Exhibit 99.2, Exhibit 99.3, and Exhibit 99.4. The disclosure contained in Item 2.01 of the Original 8-K is repeated below for convenience.
No other changes have been made to the Original 8-K except to remove Item 7.01 and related disclosure regarding a press release that
was issued in connection with the completion of the acquisition of substantially all the assets of T R Miller.
|
Document Period End Date |
Jun. 01, 2023
|
Entity File Number |
001-41038
|
Entity Registrant Name |
STRAN
& COMPANY, INC.
|
Entity Central Index Key |
0001872525
|
Entity Tax Identification Number |
04-3297200
|
Entity Incorporation, State or Country Code |
NV
|
Entity Address, Address Line One |
2 Heritage Drive
|
Entity Address, Address Line Two |
Suite 600
|
Entity Address, City or Town |
Quincy
|
Entity Address, State or Province |
MA
|
Entity Address, Postal Zip Code |
02171
|
City Area Code |
800
|
Local Phone Number |
833-3309
|
Written Communications |
false
|
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|
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false
|
Pre-commencement Issuer Tender Offer |
false
|
Entity Emerging Growth Company |
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|
Elected Not To Use the Extended Transition Period |
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|
Common Stock, par value $0.0001 per share |
|
Title of 12(b) Security |
Common Stock, par value $0.0001 per share
|
Trading Symbol |
SWAG
|
Security Exchange Name |
NASDAQ
|
Warrants, each warrant exercisable for one share of Common Stock at an exercise price of $4.81375 |
|
Title of 12(b) Security |
Warrants, each warrant exercisable for one share of Common Stock at an exercise price of $4.81375
|
Trading Symbol |
SWAGW
|
Security Exchange Name |
NASDAQ
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