United States securities and exchange commission logo
August 20, 2021
Andrew Shape
Chief Executive Officer and President
Stran & Company, Inc.
2 Heritage Drive, Suite 600
Quincy, MA 02171
Re: Stran & Company,
Inc.
Draft Registration
Statement on Form S-1
Submitted July 23,
2021
CIK No. 0001872525
Dear Mr. Shape:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1 Submitted July 23, 2021
Prospectus Cover
1. We note your disclosure
on page 25 that you may seek quotation on the OTCQX Best
Market or OTCQB Venture
Market if you fail to obtain a Nasdaq listing. Please disclose
this on your prospectus
cover and in your prospectus summary. Please clearly state, if
true, that listing on
Nasdaq is not a condition to the offering.
2. We note your disclosure
on page 26 that your key officers and directors will own a
majority of your
outstanding common stock after this offering and will therefore have the
ability to control all
matters submitted for stockholder approval. Please disclose this on
your prospectus cover
and in your prospectus summary, including the percentage of the
voting power they will
control after this offering. In addition, to the extent you may
Andrew Shape
Stran & Company, Inc.
August 20, 2021
Page 2
qualify as a controlled company under Nasdaq rules, please
disclose this in your filing,
including risk factor disclosure, and state whether you intend to rely
on any controlled
company exemptions.
COVID-19 Pandemic, page 7
3. Please revise here and elsewhere that you discuss the significant
increase in your sales and
net earnings in 2020 to indicate the extent to which your contract
with the U.S. Census
program customer was responsible for this increase. Please also
indicate the extent to
which your sales decline in the first quarter of 2021 is due to the
loss of this customer, as
your current disclosure suggests that it is due to the impact of
COVID. To the extent the
decrease in sales in the first quarter of 2021 was due to COVID,
please explain why
COVID did not have an impact on your 2020 sales and net earnings.
Risk Factors
Our business could be materially adversely impacted by the COVID-19 pandemic,
page 15
4. Please revise this risk factor to specifically discuss the impact that
the COVID-19
pandemic has had on your business to date, rather than presenting such
risks as
hypothetical. Please quantify the impact on your revenues and any
COVID-related costs
incurred. In this regard, we note your disclosure that the cost of raw
materials and
shipping related costs increased significantly in the last twelve
months as a result of the
COVID-19 pandemic. Please make confirming revisions in the Management
s Discussion
and Analysis section.
There is a risk of dependence on one or a group of customers..., page 19
5. You state that unsophisticated investors or investors that are not
aware of the impact of
revenue from the U.S. Census customer on your 2020 results may have an
expectation of
much faster revenue growth. Given your obligation to disclose all
material information to
potential investors, please make clear throughout your registration
statement that your
2019 and 2020 results include the revenue generated from the U.S.
census customer, that
your engagement with this customer will not continue, and that the
revenue increases in
these periods do not represent your long-term growth expectations. To
the extent you
expect that future revenues and net sales could decrease following the
loss of this
customer, please state this clearly.
Use of Proceeds, page 31
6. Please disclose the interest rate and maturity date of your bank line of
credit, the balance
FirstName LastNameAndrew Shape
of which you intend to repay with the offering proceeds. Refer to
Instruction 4 to Item
Comapany NameStran
504 of & S-K.
Regulation Company,
PleaseInc.
also provide the disclosure required
by Instruction 6 to
AugustItem 504 of
20, 2021 Regulation
Page 2 S-K in regards to your planned acquisitions and
partnerships.
FirstName LastName
Andrew Shape
FirstName LastNameAndrew Shape
Stran & Company, Inc.
Comapany
August 20, NameStran
2021 & Company, Inc.
August
Page 3 20, 2021 Page 3
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
37
7. We note your disclosure that you generate a majority of your revenue
from program
business and you believe you can convert your transactional customer
base into program
customers with much greater revenue potential. Please disclose how you
define program
revenue as compared to transactional revenue and why you believe
program revenue has
greater revenue potential. Please also include a breakdown of
historical program and
transactional revenue. We also note your disclosure that you earn
revenue from the sale
of promotional products and from service fees. To the extent these
categories are different
from transactional and program revenue, please include a historical
breakdown of these
revenue streams as well.
Management's Discussion and Analysis
Results of Operations
Comparison of the Year Ended December 31, 2019 and 2020, page 42
8. Please expand your discussion to provide quantified analysis of the
significant drivers
behind material changes and any known trends or uncertainties that you
reasonably expect
will have a material impact on your sales or income. For example, for
the year ended
December 31, 2020, you attribute the 24.5% increase in sales to an
acquisition and organic
growth without quantifying the impact. Please also discuss known
trends regarding major
customers. For each period discussed, please quantify the change in
revenue and the
impact of changes on the material drivers and discuss the underlying
causes for these
changes. Refer to Item 303(a)(3) of Regulation S-K and SEC Release
33-8350.
Liquidity and Capital Resources, page 43
9. We note your disclosure that you believe your current cash levels,
with or without the
proceeds of this offering, will be sufficient to meet your anticipated
cash needs for at least
the next 12 months. We also note your disclosure on page 24 that you
do not know
whether your line of credit will be renewed, and if it is not, you may
default on your line
of credit as well as your other obligations. Given your intention to
repay the balance
under your line of credit with the proceeds of this offering, please
disclose whether your
liquidity discussion assumes the renewal and availability of your line
of credit.
Business, page 52
10. Please include a description of the material terms of your agreements
with CarltonOne,
Harte Hanks, and Facilisgroup and file such agreements as exhibits to
your registration
statement. Refer to Item 601(b)(10) of Regulation S-K. Alternatively,
please tell us why
this is not required.
Andrew Shape
FirstName LastNameAndrew Shape
Stran & Company, Inc.
Comapany
August 20, NameStran
2021 & Company, Inc.
August
Page 4 20, 2021 Page 4
FirstName LastName
Management, page 73
11. We note your disclosure on page 85 that the SEC revoked Long
Blockchain Corp s
registration under the Exchange Act on February 22, 2021. Given the
overlap in
management of Stran & Company and Long Blockchain Corp, in an
appropriate place in
this section, please disclose this matter and the underlying facts
that resulted in such
revocation.
Executive Compensation
Employment Agreements, page 78
12. We note that you have listed four Named Executive Officers but have
only provided a
description of the employment arrangements for three of the four.
Please include a
description of Christopher Rollin s employment arrangements.
Certain Relationships and Related Party Transactions, page 82
13. Please include disclosure covering the last three fiscal years. Please
refer to Instruction 1
to Item 404 of Regulation S-K, particularly the three-year requirement
for registration
statements.
Principal Shareholders, page 86
14. Given Mr. Stranberg has voting and investment power over the shares of
common stock
held by Theseus Capital via an irrevocable proxy, please add the
shares held by Theseus
to the total shares held by Mr. Stranberg. Refer to Instructions 2 and
5 to Item 403 of
Regulation S-K.
Financial Statements, page F-1
15. We note per page 1 that you completed a forward stock split on May 24,
2021, and that
references to number of shares have given effect to this split;
however, we note that the
number of shares presented in the financial statements have not been
adjusted. Please tell
us your consideration of SAB Topic 4:C in regard to the number of
shares presented in
your December 31, 2020 and March 31, 2021 financial statements.
Inventory , page F-10
16. We note that you purchase products and branding through various
third-party
manufacturers and decorators and resell the finished goods to
customers. We also note a
finished goods inventory balance of branded products. It would appear
that these products
have been purchased for resale to specific customers, and therefore,
these branded
products can not be resold to another customer. In this regard, please
tell us the nature of
the products that comprise this balance, including whether the balance
represents products
expected to be sold to specific customers, and if not, how you
determined the value of the
inventory can be recovered.
Andrew Shape
Stran & Company, Inc.
August 20, 2021
Page 5
Revenue Recognition, page F-22
17. We note per pages 1 and F-8 that in addition to selling branded
products, you offer your
clients additional services. We also note per page F-23 that you
facilitate a reward card
program and recognize transaction fees. Please tell us your
consideration of presenting
net sales of tangible products separately from revenues from services
in accordance with
Item 5-03(a) of Regulation S-X.
18. We note per page 61 that your top five categories of products sold are
wearables, writing,
drinkware, technology, and events. Please tell us how you considered
these different
types of categories when determining your disaggregated revenue
disclosure. Refer to
ASC 606-10-50-5 to 7 and 55-89 to 91.
Note N: Acquisition, page F-26
19. Please disclose the amortization period for the acquired customer list
in accordance with
ASC 350-30-50-1(a)(3).
Exhibits
20. We note you identified several director nominees in your Management
section on page 73.
Please file consents for each director nominee as exhibits to your
registration statement.
Refer to Rule 438 of Regulation C
General
21. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications. Please contact the staff
member associated
with the review of this filing to discuss how to submit the materials,
if any, to us for our
review.
You may contact Nasreen Mohammed at 202-551-3773 or Theresa Brillant at
202-551-
3307 if you have questions regarding comments on the financial statements and
related
matters. Please contact Taylor Beech at 202-551-4515 or Erin Jaskot at
202-551-3442 with any
other questions.
FirstName LastNameAndrew Shape Sincerely,
Comapany NameStran & Company, Inc.
Division of
Corporation Finance
August 20, 2021 Page 5 Office of Trade
& Services
FirstName LastName