UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2024
☐ TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to
_____________
Commission File No. 001-41038
STRAN & COMPANY, INC.
(Exact name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
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, $0.0001 par value per share SWAG The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
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. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report.
☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 28, 2024 (the last business day of
the registrant’s most recently completed second fiscal quarter), the aggregate market value of the registrant’s shares of
common stock held by non-affiliates (based upon the closing price of such shares as reported on The Nasdaq Stock Market LLC) was $11,070,515.52.
Shares held by each executive officer and director and by each person who owned more than 10% of the outstanding shares of common stock
have been excluded from the calculation in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.
As of April 8, 2025, there were a total of 18,608,408 shares of
the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Stran & Company, Inc.
Annual Report on Form 10-K
Year Ended December 31, 2024
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Business 1
Item 1A. Risk Factors 19
Item 1B. Unresolved Staff Comments 38
Item 1C. Cybersecurity 39
Item 2. Properties 40
Item 3. Legal Proceedings 41
Item 4. Mine Safety Disclosures 41
PART II - OTHER INFORMATION
Item 6. [Reserved] 43
Item 7A. Quantitative and Qualitative Disclosure About Market Risk 53
Item 8. Financial Statements and Supplementary Data 53
Item 9A. Controls and Procedures 53
Item 9B. Other Information 55
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 55
PART III
Item 10. Directors, Executive Officers and Corporate Governance 56
Item 11. Executive Compensation 59
Item 14. Principal Accountant Fees and Services 77
PART IV
Item 15. Exhibits and Financial Statement Schedules 79
Signatures 82
i
INTRODUCTORY NOTES
Use of Terms
Except as otherwise indicated by the context and
for the purposes of this Annual Report on Form 10-K only, references to “we,” “us,” “our,” and the
“Company” are to Stran & Company, Inc., a Nevada corporation, and its consolidated subsidiaries; references to “Stran”
or “Stran & Company, Inc.” are to Stran & Company, Inc., a Nevada corporation; references to “Stran Loyalty
Solutions” or “SLS” are to Stran Loyalty Solutions, LLC, a Nevada limited liability company and a wholly-owned subsidiary
of Stran & Company, Inc.; and references to “Gander Group Louisiana” are to Gander Group Louisiana, LLC, a Louisiana limited
liability company, a wholly owned subsidiary of Stran Loyalty Solutions.
Note Regarding Trademarks, Trade Names and
Service Marks
We use various trademarks, trade names and service
marks in our business, including “STRÄN,” “STRÄN promotional solutions,” “Stran Promotional Solutions,”
and “Gander Group.” For convenience, we may not include the SM, ® or TM symbols, but such
omission is not meant to indicate that we would not protect our intellectual property rights to the fullest extent allowed by law. Any
other trademarks, trade names or service marks referred to in this report are the property of their respective owners.
Note Regarding Industry and Market Data
This report includes industry data and forecasts
that we obtained from industry publications and surveys including but not limited to certain publications of the promotional products
member groups Advertising Specialty Institute (ASI) and the Promotional Products Association International (PPAI), as well as public filings
and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has
been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of the included information.
Statements as to our ranking, market position and market estimates are based on third-party forecasts, management’s estimates and
assumptions about our markets and our internal research. We have not independently verified such third-party information, nor have we
ascertained the underlying economic assumptions relied upon in those sources, and we cannot assure you of the accuracy or completeness
of such information contained in this report. Such data involve risks and uncertainties and is subject to change based on various factors,
including those discussed under Item 1A. “Risk Factors” and “—Note Regarding Forward-Looking Statements”
below.
Note Regarding Forward-Looking Statements
This report contains forward-looking statements
that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than
statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance
and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied
by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
● our goals and strategies;
● our business development, financial condition and results of operations;
● expected changes in our revenue, costs or expenditures;
● growth and competition trends in our industry;
ii
● future relevant government policies and regulations relating to our industry.
In some cases, you can identify forward-looking
statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,”
“plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” “project” or “continue” or the negative of these terms or other comparable terminology.
These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and
unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results.
Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item
1A. “Risk Factors” and elsewhere in this report. If one or more of these risks or uncertainties occur, or if our underlying
assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking
statements. No forward-looking statement is a guarantee of future performance.
In addition, statements that “we believe”
and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available
to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information
may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or
review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to
unduly rely upon these statements.
The forward-looking statements made in this report
relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by the
federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new
information, future events, changed circumstances or any other reason.
Summary of Risk Factors
The following is a summary of material risks that
could affect our business. This summary may not contain all of our material risks, and it is qualified in its entirety by the more detailed
risk factors set forth under Item 1A. “Risk Factors”.
iii
● There is a risk of dependence on one or a group of customers.
iv
● Volatility in the global financial markets could adversely affect results.
v
PART I
ITEM 1. BUSINESS.
Overview
We are an outsourced marketing
solutions provider, working closely with our customers to develop sophisticated marketing programs that leverage our promotional products
and loyalty incentive expertise. We develop long-term relationships with our customers, enabling them to connect with both their customers
and employees in order to build lasting brand loyalty. It is our mission to drive brand awareness and affect behavior through visual,
creative, and technology solutions.
We purchase
products and branding through various third-party manufacturers and decorators and resell the finished goods to customers. In addition
to selling branded products, we offer our clients custom sourcing capabilities; a flexible and customizable e-commerce solution for promoting
branded merchandise and other promotional products, managing promotional loyalty and incentives, print collateral, and event assets, order
and inventory management, and designing and hosting online retail popup shops, fixed public retail online stores, and online business-to-business
service offerings; creative and merchandising services; warehousing/fulfillment and distribution; print-on-demand; kitting; point of sale
(POS) displays; and loyalty and incentive programs.
These valuable services, as well as the deep level
of commitment we have to the business operations of our customers, have resulted in a strong and stable position within the industry.
We specialize in managing complex promotional
marketing programs to help recognize the value of promotional products and branded merchandise as a tool to drive awareness, build brands
and impact sales. This form of advertising is very powerful and impactful and particularly effective at building brand loyalty because
it typically uses products that are considered useful and appreciated by recipients and are retained and used or seen repeatedly, repeating
the imprinted message many times without adding cost to the advertiser. We have built the tools, processes, relationships and the blueprint
to maximize the potential of these products and deliver the most value to our customers.
For over 30 years we have
grown into a leader in the promotional products industry, ranking 20th on PPAI’s Top 100 Distributors 2024 list and 27th
on ASI’s Top 40 Distributors 2024 list. Our co-founder and Chief Executive Officer and President, Andrew Shape, was also named 2023
Person of the Year by promotional products industry periodical Counselor. Since our first year of operations in 1995, our annual
revenues have gradually grown from approximately $240,000 to approximately $82.7 million in 2024, a compound annual growth rate of approximately
22.3%, and between 2018 and 2024, our revenues grew at a compound annual growth rate of approximately 22.8%.
As of December 31, 2024,
we had total assets of approximately $55.1 million with total stockholders’ equity of $31.6 million.
We serve a highly diversified
customer base across many industry verticals including pharmaceutical and healthcare, manufacturing, gaming, technology, finance, construction
and consumer goods. Many of our customers are household names and include some of the largest corporations in the world.
Our sales increased 8.8% year-over-year in 2024
compared to 2023, which we believe was primarily due to higher spending from existing clients
as well as business from new customers. Additionally, we benefited from the acquisition of the assets
of T R Miller Co., Inc., a Massachusetts corporation (“T R Miller”),
in June 2023, and from the acquisition of substantially all of the assets (the “Gander
Group Assets”) of Bangarang Enterprises, LLC, a California limited liability
company (d/b/a Gander Group) (“Gander Group”), in August 2024.
Our headquarters are located
at Quincy, Massachusetts, with additional offices located in Warsaw, Indiana; Mt. Pleasant, South Carolina; Walpole, Massachusetts; Tomball,
Texas; and Irvine, California. We also have sales representatives in 22 additional locations across the United States and a network of
service providers in the U.S. and abroad, including factories, decorators, printers, logistics firms, and warehouses.
1
Our Industry
Overview of Promotional Products Market
The promotional products industry is large yet
highly-fragmented, with thousands of smaller participants and indications of a lack of market power in any one firm or group of firms.
The industry has generally experienced growth as businesses continuously invest in sophisticated marketing campaigns involving multiple
types of advertising. Promotional products are items used to promote a product, service or company program including advertising specialties,
premiums, incentives, business gifts, awards, prizes, commemoratives and other imprinted or decorated items. They are usually given away
by companies to consumers or employees. The largest promotional products trade organizations are the Advertising Specialty Institute (ASI)
and Promotional Products Association International (PPAI).
U.S. Promotional Products is a Large and
Growing Market
According to ASI, the market for promotional products
sales reached a record high of $26.6 billion in 2024. Moreover, the promotional products market is only one segment of a total addressable
market of possibly up to $406 billion, based on the size of the promotional products market ($26.1 billion in 2023 according to ASI);
the product packaging market ($185 billion as of 2021, according to Mordor Intelligence, a leading market intelligence and advisory firm);
the loyalty incentive programs market ($90 billion annually according to the Incentive Marketing Association, the umbrella organization
for suppliers in the incentive marketplace); the printing market ($83 billion projected for 2023, according to IBISWorld, an industry
research provider); and the trade show and conference planning market ($22 billion projected for 2023, according to IBISWorld).
The
Promotional Products Industry Is Resilient To Other Forms of Advertising
The promotional
products industry is relatively insulated from other forms of advertising such as television and digital advertising. Although promotional
products compete for space within an advertising budget with other forms of advertising, particularly online advertising, they offer distinct
benefits, particularly due to their physical nature, which may help distributors and suppliers continue to sell these products and related
services despite these budgetary pressures. Data shows that promotional products are more effective in generating brand recognition and
sales than other forms of advertising, including television and online advertisements. These factors help shield established industry
firms like ours from the technological and competitive disruption experienced by other types of media advertisers.
The Promotional Products Industry is Highly
Fragmented
The promotional products
industry is also highly fragmented. As of 2024, the firm with the greatest percentage of industry sales generated $1.3 billion in sales
but made up only approximately 5.0% of the $26.6 billion in sales generated in 2024 by promotional products distributors, based on information
reported by ASI and the firm itself. As a group, the top 40 distributors had approximately 37.9% market share as of 2024, based on total
sales of approximately $9.9 billion out of total promotional products distributors’ revenues for 2024 of $26.1 billion, based on
ASI’s reports.
Unlike our company, which
provides comprehensive solutions to complex promotional and branding challenges, we view most of our competitors as generally falling
into one of the five categories below:
2
Promotional Products are a High-impact, Cost-effective Advertising
Medium
Because promotional products are useful and appreciated
by recipients, they are retained and used, repeating the imprinted message many times without added cost to the advertiser. ASI’s
Global Ad Impressions Study, 2023 Edition, reported:
In 2018, PPAI reported that promotional products
are the most impactful form of advertising across all generations. Whereas reportedly less than 55% of consumers read or watch an entire
advertisement online, in an email, on television, in the mail, in a magazine, or on the radio, over 80% of consumers retain promotional
products. Moreover, promotional products have been ranked the most effective form of advertising across all generations, outranking even
television, online, print, and mobile forms. A 2019 PPAI report revealed additional statistics reflecting the significant impact of promotional
products on consumers:
● Eight out of ten consumers enjoy receiving promotional products.
● Seven in ten consumers would like to receive promotional products more often.
Nearly all consumers say they would go out of
their way to receive promotional products.
As of 2016, PPAI reported that, overall, buyers
consider promotional products mostly or always effective in achieving marketing goals. They generally consider promotional products more
effective than social media and nearly as effective as all other media. Data indicates that the majority of buyers do have a budget set
aside for promotional products. However, for more than 72% the allocation is less than 20% of their marketing advertising budget. When
asked what their plans were for promotional products spend over the next 12 months, only 3% projected a decrease in product purchases.
This data suggests that the potential for promotional products’ market growth is significant.
3
Competitive Strengths
We believe our key competitive strengths include:
4
Growth Strategies
The key elements of our strategy to grow our business
include:
We believe that this strategy and experience
will help us to pursue suitable acquisition opportunities in the future and integrate them successfully. Consistent with this strategy,
we continue to evaluate potential acquisition targets, particularly with the following attributes:
5
Other strategies that we plan to implement
to expand our customer base with expanded sales staff and technology resources include:
Products and Services
Overview
Since our inception over 30 years ago, we have
provided clients with marketing services that help drive sales, and make an impact using custom-branded merchandise, commercial print,
loyalty and incentive programs, packaging and POS solutions while providing a technology solution to deliver these products and services
efficiently via our warehouse and fulfillment system.
6
Our value to our customers is to be an extension
of their own teams. We work to understand the different business and marketing goals of each customer and provide solutions that incorporate
technology, human capital, and physical branded goods to solve their business challenges. This model of outsourced combined marketing
and program-management services is unique in the promotional products industry, which is dominated by online e-tailers, franchisees, and
mom-and-pop businesses. To achieve this value, we have built the internal resources, knowledge, and processes to support our clients with
more than just commodity items.
We are both program managers and creative marketers,
having developed multiple teams within our organization to specialize and focus our efforts on supporting customers with the specific
support that they need:
We work closely with industrial designers of several
of our key collaborators to understand the research and trends that are influencing product development in the six- to 18-month window
ensuring that our team is up-to-date on trends in the industry.
Promotional Product Programs
We run complex corporate promotional marketing
programs for clients across many different industry verticals. Most of our clients take advantage of all the services we provide; however,
at the core of every program are the promotional products themselves. Our team works diligently to stay on point with the current trends
so our clients’ branded products are relevant. We distribute a wide variety of promotional products to our customers, with the most
popular promotional products including wearables, writing utensils, drinkware, technology and events-related products.
Loyalty and Incentives Programs
We build custom solutions for customers looking
to drive either customer or employee behavior. We help our customers build a customer loyalty program or an employee incentive program
that meets each customer’s specific needs. Our solutions can include gamification tools, social media integration, and a points-based
plan that rewards clients’ users with a combination of physical products, digital rewards, gift cards, and experiential rewards
nurturing loyalty to their brand. For example, we worked closely with a global producer of vaccines and medicines for animals, to design
and implement a two-tier incentive program in which, on one tier, veterinarians were incentivized to purchase from our customer through
providing them with promotional branded products, and, on a second tier, a loyalty points program featuring prepaid debit card rewards
for end-user pet owners who buy their products.
7
In developing our loyalty and incentive offering,
Stran has taken a similar approach as we have in other areas of our business. Instead of developing our own internal solutions organically,
we have sought out relationships with businesses with a variety of offerings that meet the very different needs of each of our customers.
By using a collection of third-party providers, we are able to offer a more robust technology solution that meets the constantly evolving
and changing needs of our incentive users.
Packaging and Point of Sale
Presentation makes all the difference. Clever
and custom packaging and POS displays are essentials for elevating brand awareness and critical for driving sales. From packaging of corporate
merchandise and promotional products to developing custom POS displays, clients come to us when they want to stand out and show the quality
that their brands offer. We produce custom packaging and POS projects domestically as well as overseas for larger-run custom programs
for many of our clients.
Commercial and Digital Printing
Printed informational materials used for marketing,
or marketing collateral, such as business cards and brochures, are an essential component to effectively conveying information and marketing
messages, and arguably all businesses use some form of marketing collateral. When a customer needs print collateral, our digital print-on-demand
options route their orders through our technology platform and to our network of commercial printers to ensure that our customers can
print each piece of collateral in the most effective and efficient manner. By offering print management with our promotional branded merchandise
solutions, we help our customers create impactful presentations and mailings through the most efficient processes.
Warehouse and Fulfillment
We offer a global solution for warehousing and
fulfillment through a network of fulfillment providers including a 14-year relationship with industry leader Harte Hanks. These long-standing,
strategic relationships provide our clients with process-driven fulfillment solutions that are scalable to meet client needs including
real-time inventory reporting, climate-controlled facilities, high-value product security, storage, digital print-on-demand, and direct-mail
solutions. Our custom front-end technology solution is directly integrated with the warehouse management software of our strategic global
warehouse collaborators.
In addition to continuing to use our third-party
logistics partners like Harte Hanks, we are expanding our in-house warehouse, decoration, and fulfillment capabilities. Our acquisition
of the business and assets of T R Miller provides us with an approximately 25,000-square-foot warehouse, production, and distribution
center in Walpole, Massachusetts and our acquisition of Trend Brand Solutions provides us with an approximately 5,000 square-foot warehouse
and distribution center in Tomball, Texas. We leverage these facilities to offer our customers specialty fulfillment, kitting, and warehousing,
allowing us greater control and flexibility to meet the complex demands of our customers.
Technology
Our custom-developed e-commerce Magento Open Source
platform allows our customers to manage all facets of their marketing program, linking branded merchandise, print, event assets, customer
relationship management, or CRM, loyalty and incentives in a single solution. Our platform creates cost savings, increasing market efficiencies
and brand consistency. With real-time accessibility to the necessary data to operate a complex demanding marketing program including hierarchy
user profile groups, multi-lingual, multi-currency, multi-checkout methods and integration into many major ERP systems (SAP ERP, NetSuite
ERP, Workday, etc.). Our on-demand mobile reporting dashboard capabilities allows the ability for self-service access within our systems
empowering clients with raw data to make informative decisions for their program.
8
We have also invested in an internal commercial
Enterprise Resource Planning (ERP) system, Oracle/NetSuite’s NetSuite ERP, which is expected to enhance the process of gathering
and organizing the business data of our company through an integrated software suite, and was launched in the first half of 2025. Additional
NetSuite phases will be planned and rolled out in the future as necessary. NetSuite combines accounting, order management, inventory,
CRM, and presentation functionality. We believe that this ERP will reduce inefficiencies, expenses and headcount, automate current manual
processes, and potentially contribute to growing net revenues.
Human Capital and Culture
We are more than an efficient distributor or supplier,
and we offer our customers more than just products. We help them achieve their marketing and business goals using branded merchandise
supported with technology, logistics, creative services, and account support. In order to provide all of these value-added services, we
must leverage and cultivate the talent of our employees.
As an organization
we encourage our team to engage with professional development opportunities. These opportunities include online courses, webinars, training
sessions, and participation in various networking and professional development groups. As such we currently have a member of our
team who serves on the board of directors for NEPPA (New England Promotional Products Association), a regional trade association, as well
as a member of Chief, a network of 20,000 women executives, representing 10,000 companies and 77% of the Fortune 100, designed specifically
for women executives to strengthen their leadership and maximize their business impact. Empowering
our team to grow their own careers helps ensure that we are more knowledgeable, experienced, and engaged.
Pricing
As a large
and growing firm with over 500 suppliers and due to our membership in Facilisgroup, Stran has the purchasing power to receive advantageous
pricing, helping us with price-sensitive bids. Facilisgroup, a buying group of fewer than 1% of distributors in the industry, processed
over $1.4 billion of sales in 2023. Pursuant to our Sublicense Agreement, we may access Facilisgroup’s @ease proprietary software
tools for promotional products business management and analysis and a white labelled, managed, product website which we may use to sell
promotional products under our brand. We may also access its “Signature Collection” website which Facilisgroup promises offers
the best products and margins.
In addition
to this competitive buying power, Stran has developed factory direct relationships with multiple factories in the U.S. and overseas. These
direct relationships require additional vetting, longer production times, and larger production runs. However, we work to blend production
from factory direct manufacturing with our other suppliers to continue to drive costs down on commodity-based items. We compete regularly
with larger competitors and maintain healthy margins using this strategy for sourcing and procuring products.
Supplier and Fulfillment Relationships
We have formed strategic relationships with fulfillment
and commercial print providers in the United States in order to effectively warehouse and distribute merchandise from one or more of our
warehouse facilities depending on our customer’s requirements. For over 30 years, we have developed these strategic relationships
in order to offer our clients a powerful solution for their branded merchandise needs. Together, we have experience in developing custom
marketing solutions for our clients and regularly kit together promotional printed items and branded product into a single package. Our
expertise in product development and sourcing, technology development, and program management combined with our various collaborators’
superior warehousing, logistics, fulfillment, distribution and print services are a competitive advantage.
We offer a global solution for warehousing and
fulfillment through a network of fulfillment providers including a 14-year relationship with industry leader Harte Hanks. We buy products
and certain raw materials from a supplier network of factories, both domestic and international, as needed. We also outsource certain
technology services such as web hosting and data backup. We do not believe that we are dependent on any supplier. Should any of these
suppliers terminate their relationship with us or fail to provide the agreed-on services, we believe that there would be sufficient alternatives
to continue to meet customer demand and comply with our contractual obligations without interruption.
9
Marketing
We have a direct sales team
consisting of over 53 outside sales representatives and 25 in-house sales representatives. We incentivize our representatives with a competitive
compensation, incentive, and commission structure.
Our marketing approach combines
the sales funnel concept of the marketing process with digital and in-person marketing efforts. We market to a large number of prospects
at the top of the sales funnel to make them aware of our business and our products and services by combining lead-generation activities
with digital marketing, including website content, SEO, paid ads, and email list promotions, and in-person activities including tradeshow
and other events. We use targeted emails, social media messages, and other digital and in-person lead-nurturing activities, develop case
studies, and apply other digital and in-person sales tools to market to prospects that demonstrate interest in our business. For prospects
that demonstrate readiness to buy and reach the bottom of the sales funnel, we use tools such as sales presentations, sales proposals,
and sell sheets.
Our efforts in in-person
marketing include expanding the number of tradeshows and conferences that we attend and sponsor across different industry verticals. At
these tradeshows, we plan to target representatives of specific industry verticals, such as the beverage industry or the gaming market,
and a variety of professionals attending events focused in the areas of marketing or procurement development.
In addition to efforts to
develop new business opportunities, our marketing team works closely with our sales team and our managers to develop opportunities from
existing customer accounts. With existing customers, we are seeking to cross-sell and expand our services to encompass all employee, customer,
and partner loyalty and engagement programs that are designed to reward loyalty through a combination of premium products, branded merchandise,
and digital and experiential rewards.
Customers and Markets
Stran’s
customer base includes approximately 2,000 active customers and over 30 Fortune 500 companies,
servicing a diverse customer base, encompassing pharmaceutical and healthcare, manufacturing, gaming, technology, finance, construction
and consumer goods. Our active customers are any organizations, businesses, or divisions
of a parent organization which have purchased directly or indirectly from us within the last two years, and include organizations that
have bought from other organizations for which Stran acts as an established subcontractor. We have long-term contracts with many of our
customers, though most do not have minimum guarantees. We have ongoing contracts with clientele in such industries as financial services,
casino gaming, consumer packaged goods, retail clothing and accessories, pet food and medicine, fitness, child care, retail hardware,
fast food franchises, health care, and environmental services. Contracts are often multi-year and auto-renewing. Our average contract
lifespan is approximately 10 years. Alternatively, we do have inventory guarantees where the customer must purchase any inventory held
by us that has been purchased on their behalf within the contractual time periods. Our active customers may be broken into two main categories,
transactional clients and program clients.
During 2024,
sales to our largest two customers were 8.4% and 6.8% of total revenue, respectively. During
2023, sales to our largest two customers were 14.4% and 7.8% of total revenue, respectively. All other customers generated less than 5%
of sales, and the vast majority generated less than 1% of sales.
While our customer contracts are typically auto-renewing
and we have many long-term established customer relationships, most of our customer contracts do not have any minimum or exclusive purchase
guarantees, other than as to inventory already ordered by them or their program participants. There is no assurance of recurring revenues.
We are not dependent on any particular customer or group of customers, and our highest-grossing contracts may change from year to year
due to client brand initiatives.
We do business principally with customers based
in the United States, although we also provide e-store, logistical support and other promotional services for client programs in Canada
and Europe.
10
Online Store
We have been a leader in the use of technology
to offer our clients an online platform to more efficiently manage their promotional marketing programs and to give them the ability to
sell branded merchandise directly to consumers. We launched our first online store for one of our clients in 1999. Today we offer a custom-built
technology platform which offers a B2C (business-to-consumer) retail shopping experience combined with all of the back-end functionality
required of a powerful B2B (business-to-business) marketing services platform. Our technology platform services over 280 online stores
for our clients.
Our Online Store Account Managers are responsible
for ensuring that our stores are up to date with all products, images, and descriptions. As new products are approved to be added to the
online store, our account manager will work the appropriate resources to prep the images, write the descriptions and upload the images.
Typically, this process will take 24-48 hours. For inventoried products, we typically do not make the products live on the website until
they have been received into inventory and are ready to be fulfilled.
If there is an issue with an online store, we
have dedicated account-specific customer service teams who support all aspects of order fulfillment that the user can contact to help
resolve. If there is a back-order situation where an order would not be able to ship complete or on time, the appropriate team will review
the order and advise the customer on the best and timeliest options to fulfill the order.
Competition
Our major competitors include companies such as
4Imprint Group plc (LSE: FOUR.L), Brand Addition Limited (The Pebble Group plc) (LSE: PEBB), BAMKO LLC (Superior Group of Companies, Inc.)
(Nasdaq: SGC), Staples Promotional Products (Staples, Inc.), Boundless Network, Inc. (Zazzle Inc.), Custom Ink, Cimpress plc (Nasdaq:
CMPR), HALO Branded Solutions, Inc., Imagine This (Shye West, Inc.), Power Promotions, Inc. and Global Promotional Sourcing, LLC. We also
compete with a multitude of foreign, regional and local competitors that vary by market. If our existing or future competitors seek to
gain or retain market share by reducing prices, we may be required to lower our prices, which would adversely affect our operating results.
Similarly, if customers or potential customers perceive the products or services offered by our existing or future competitors to be of
higher quality than ours or part of a broader product mix, our revenues may decline, which would adversely affect our operating results.
Our Program Management
We are experienced and industry-leading program
managers who integrate all aspects of a successful program. Our program team works hand in hand with our account teams to drive the processes
and procedures that ensure we are effectively managing our programs. For Stran, program management is built upon six key building blocks:
11
Under our agreement with Harte Hanks,
as amended and supplemented, we may subcontract to Harte Hanks one or multiple functions as appropriate, such as e-store website setup;
ongoing website inventory management services; monthly account management services; and print-on-demand, warehousing, fulfillment, pick/pack/ship,
and other inventory management services. Costs and fees depend on types of services provided and any special or custom work that we request
on behalf of our customers.
In addition to continuing to use our
third-party logistics partners like Harte Hanks, we are expanding our in-house warehouse, decoration, and fulfillment capabilities. Our
acquisition of T R Miller provides us with a 25,000-square-foot warehouse and distribution center in Walpole, Massachusetts and our acquisition
of Trend Brand Solutions provides us with a 5,000 square-foot warehouse and distribution center in Tomball, Texas. We leverage these facilities
to offer our customers specialty fulfillment, kitting, and warehousing, allowing us greater control and flexibility to meet the complex
demands of our customers.
12
Intellectual Property
We conduct our business using the registered trademark “STRÄN”
and “Gander Group” as well as the registered trade name “Stran Promotional Solutions”. We also use the unregistered
logo “STRÄN promotional solutions”.
To protect our intellectual property, we rely
on a combination of laws and regulations, as well as contractual restrictions. Federal trademark law protects our registered trademark
STRÄN and Gander Group and may protect our unregistered logo “STRÄN promotional solutions”. We also rely on the
protection of laws regarding unregistered copyrights for certain content we create and trade secret laws to protect our proprietary technology
including our e-commerce platform and ERP system. To further protect our intellectual property, we enter into confidentiality agreements
with our executive officers and directors.
Seasonality and Cyclicality
Our business
and the promotional products industry overall is generally subject to some seasonal fluctuations. The final quarter of the calendar year
is generally the strongest due to the holiday selling season and customers exhausting annual marketing budgets, while the first quarter
of the calendar year is generally the weakest due to customers planning their budgets and marketing campaigns for the upcoming year.
Portions
of the promotional products industry are cyclical in nature. Generally, when economic conditions are favorable, the industry tends to
perform well. When the economy is weak or if there are economic disturbances that create uncertainty with corporate profits, the promotional
products industry tends to experience low or negative growth.
Security
We regularly receive and store information about
our customers, vendors and other third parties. We have programs in place to detect, contain, and respond to data security incidents.
See Item 1C. “Cybersecurity”. However, because the techniques used to obtain unauthorized access, disable or degrade
service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate
these techniques or implement adequate preventive measures. In addition, hardware, software, or applications we develop or procure from
third parties or through open-source solutions may contain defects in design or manufacture or other problems that could unexpectedly
compromise information security. Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third
parties with whom we do business, through fraud, trickery, or other forms of deceiving our team members, contractors, and vendors.
Employees
As of March 25, 2025, we employed 153 full-time
employees, 3 part-time employees and 15 independent contractors.
We do not believe any of our employees are represented
by labor unions, and we believe that we have an excellent relationship with our employees.
13
Regulation
Trade Regulations
As disclosed above, our suppliers generally source
or manufacture finished goods in parts of the world that may be affected by the imposition of duties, tariffs or other import regulations
by the United States. The Company believes that its redundant network of suppliers provide sufficient capacity to mitigate any dependency
risks on a single supplier.
We buy promotional products from suppliers or
factories both domestically and internationally as needed. We do not depend on any single supplier. However, if we are unable to continue
to obtain our finished products from international locations or if our suppliers are unable to source raw materials, it could significantly
disrupt our business. Further, we are affected by economic, political and other conditions in the United States and internationally, including
those resulting in the imposition or increase of import duties, tariffs and other import regulations and widespread health emergencies,
which could have a material adverse effect on our business.
Laws and Regulations Relating to E-Commerce
Our business is subject to a variety of laws and
regulations applicable to companies conducting business on the internet. Jurisdictions vary as to how, or whether, existing laws governing
areas such as personal privacy and data security, consumer protection or sales and other taxes, among other areas, apply to the internet
and e-commerce, and these laws are continually evolving. For example, certain applicable privacy laws and regulations require us to provide
customers with our policies on sharing information with third parties, and advance notice of any changes to these policies. Related laws
may govern the manner in which we store or transfer sensitive information or impose obligations on us in the event of a security breach
or inadvertent disclosure of such information. Additionally, tax regulations in jurisdictions where we do not currently collect state
or local taxes may subject us to the obligation to collect and remit such taxes, or to additional taxes, or to requirements intended to
assist jurisdictions with their tax collection efforts.
The production, distribution and sale in the United
States of many of our products are subject to the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, the Lanham Act,
state consumer protection laws, competition laws, federal, state and local workplace health and safety laws, various federal, state and
local environmental protection laws, various other federal, state and local statutes applicable to the production, transportation, sale,
safety, advertising, labeling and ingredients of such products, and rules and regulations adopted pursuant to these laws. Outside the
United States, the distribution and sale of our many products and related operations are also subject to numerous similar and other statutes
and regulations.
We are subject to various federal, state and local
laws and regulations, including but not limited to, laws and regulations relating to labor and employment, U.S. customs and consumer product
safety, including the Consumer Product Safety Improvement Act (the “CPSIA”). The CPSIA created more stringent safety requirements
related to lead and phthalates content in children’s products. The CPSIA regulates the future manufacture of these items and existing
inventories and may cause us to incur losses if we offer for sale or sell any non-compliant items. Failure to comply with the various
regulations applicable to us may result in damage to our reputation, civil and criminal liability, fines and penalties and increased cost
of regulatory compliance. We are also subject to various state consumer protection laws such as Proposition 65 in California, which requires
that a specific warning appear on any product that contains a substance listed by the State of California as having been found to cause
cancer or birth defects, unless the amount of such substance in the product is below a safe harbor level.
New legislation or regulation, the application
of laws from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the
internet and e-commerce generally could result in significant additional taxes on our business. Further, we could be subject to fines
or other payments for any past failures to comply with these requirements. The continued growth and demand for e-commerce is likely to
result in more laws and regulations that impose additional compliance burdens on e-commerce companies.
Laws and Regulations Relating to Data Privacy
In the ordinary course of our business, we might
collect and store in our internal and external data centers, cloud services and networks sensitive data, including our proprietary business
information and that of our customers, suppliers and business collaborators, as well as personal information of our customers and employees.
The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. The number
and sophistication of attempted attacks and intrusions that companies have experienced from third parties has increased over the past
few years. Despite our security measures, it is impossible for us to eliminate this risk.
14
A number of U.S. states have enacted data privacy
and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal
information, such as social security numbers, financial information and other sensitive personal information. For example, all 50 states
and several U.S. territories now have data breach laws that require timely notification to affected individuals, and at times regulators,
credit reporting agencies and other bodies, if a company has experienced the unauthorized access or acquisition of certain personal information.
Other state laws, particularly the California Consumer Privacy Act, as amended (“CCPA”), among other things, contain disclosure
obligations for businesses that collect personal information about residents in their state and affords those individuals new rights relating
to their personal information that may affect our ability to collect and/or use personal information. Moreover, on January 28, 2022, the
California Attorney General announced that certain consumer loyalty programs are subject to the CCPA, which may affect some of our customers
who use our loyalty program services if they are found not to comply with the CCPA’s requirements. Effective January 1, 2023, we
also became subject to the California Privacy Rights Act (the “CPRA”), which expands upon the consumer data use restrictions,
penalties and enforcement provisions under the California Consumer Privacy Act.
In addition to California, the following U.S.
states have enacted comprehensive consumer privacy protection laws:
The European Union (the “EU”) General
Data Protection Regulation (“GDPR”) imposes stringent requirements for controllers and processors of personal data of persons
in the EU, including, for example, more robust disclosures to individuals and a strengthened individual data rights regime, shortened
timelines for data breach notifications, limitations on retention of information, increased requirements pertaining to special categories
of data, and additional obligations when we contract with third-party processors in connection with the processing of the personal data.
The GDPR also imposes strict rules on the transfer of personal data out of the EU to the United States and other third countries. In addition,
the GDPR provides that EU member states may make their own further laws and regulations limiting the processing of personal data.
The GDPR applies extraterritorially, and we may