Company: SWAGW
Filing Date: 2025-02-11
Form Type: 10-Q
Source: 0001213900-25-011872
Chunk: 14

Company: Stran & Company, Inc.
Filing Date: 2025-02-11
Form: 10-Q
Item: Part I, Item 1
Chunk 14
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 accordance with ASC Topic 820, Fair Value Measurement.

As a part of the restatement process,
the Company performed a separate assessment of each acquisition in accordance with the relevant guidance of ASC Topic 805, Business Combinations,
and completed a purchase price allocation analysis, including the proper calculation of the fair value of the certain assets acquired
and liabilities assumed and the fair value of contingent earn-out payments.

To correct the error, the Company
adjusted the final purchase price accounting for inventory, identifiable intangibles, goodwill and contingent earn-out liabilities, including
associated mark-to-market adjustments subsequent to acquisition dates.

2. Goodwill Impairment

As a result of the incorrect accounting
treatment of the Acquisitions, the Company omitted the recognition of goodwill and failed to perform an annual goodwill impairment analysis
as of October 1, 2023 and 2022.

As a part of the restatement process,
the Company performed quantitative goodwill impairment testing in accordance with ASC 350, Intangibles - Goodwill and Other as of October
1, 2023 and October 1, 2022. The Company determined that the carrying value of its reporting unit was in excess of its fair value.

To correct the error, the Company
recorded a non-cash goodwill impairment charge during the fourth quarter of fiscal years 2022 and 2023.

3. Income Taxes

The Company improperly calculated
deferred tax asset and liability balances. The Company also established several improper methods of accounting for income taxes with
respect to the Acquisitions, bad debt reserve, capitalized research, and inventory capitalization as well as other book to tax adjustments
that needed to be corrected such as charitable contributions and stock option expense.

As a part of the restatement process,
the Company calculated the correct tax adjustments for the 2021 through 2023 tax years and the impact to the income tax provision and
deferred tax asset/(liability) balances.

To correct the error, the Company
recorded journal entries to correct end of the year deferred tax asset/(liability) balances. With respect to improper methods of tax
accounting, the Company recorded an uncertain tax position (“FIN 48”) reserve for each of these items and will correct the
improper methods of tax accounting by filing an automatic method change in its 2024 U.S. federal income tax return, which will be filed
in 2025. The Company generated tax losses in 2021 and 2022, these losses were able to offset the effects