Andy Shape, co-founder and president of Stran Promotional Solutions (asi/337725), has clarified a previous report that the Quincy, MA-based distributor is merging with parent company Long Blockchain Corp. (LBCC).

Although the two companies have still entered a nonbinding letter of intent, Shape says that Stran is proposing a reverse takeover of LBCC. As a result, LBCC will dissolve and Stran will become a wholly owned subsidiary of a new public holding company – name to be determined.

“We see this as an opportunity for Stran to go public without the time and cost involved in executing an IPO, and we’re very excited about the potential moving forward,” Shape told Counselor. “Because we’ve had the opportunity to get to know Long Blockchain through our partnership with Stran Loyalty Group over the past year, we understand the opportunities that exist with the pre-existing shareholder base of nearly 7,000 shareholders – of which Stran is already one. We intend on delivering value to those shareholders by building on Stran’s 25-plus years of success.”

Currently, LBCC is the holding company for wholly owned subsidiary Stran Loyalty Group, which is a collaboration with Stran Promotional Solutions focused on providing loyalty, incentive, reward and gift card programs to corporate and consumer brands. LBCC is also the holding company for wholly owned subsidiary Long Island Brand Beverages, which operates under its flagship brand “The Original Long Island Brand Iced Tea.”

Originally named the Long Island Iced Tea Corp., the company rebranded in December 2017, shifting its primary focus from tea to cryptocurrency and blockchain services. As a result, the company’s stock skyrocketed nearly 300%, Quartz reported. Four months after the rebrand, LBCC was delisted from the Nasdaq stock market for failing to have market capitalization remain above $35 million for 10 business days in a row, a Nasdaq requirement. Nasdaq staffers also believed that LBCC misled investors and took advantage of general investor interest in bitcoin and blockchain technology, according to LBCC.

In July 2018, the U.S. Securities and Exchange Commission (SEC) launched an investigation into LBCC for insider trading and securities fraud connected to Long Island Iced Tea stock, according to court records. Shape said resolution of the investigation is not a condition of completing the transaction between Stran and LBCC since it is outside their control.

“Regarding the SEC investigation, our understanding is that the activity concerned took place prior to Stran’s involvement and relates to individuals who are no longer involved with the business,” Shape said. “LBCC has complied with all requests and has been cooperative with the SEC. SEC investigations can endure and very little information is available to a company during this time. The company still trades on the OTC Pink Sheets as publicly traded security.”

LBCC has entered into a definitive agreement for the sale of its beverage subsidiary to ECC Ventures 2 Corp., and the deal is expected to close in the fourth quarter of 2019.