Company: SWAGW
Filing Date: 2025-03-07
Form Type: 10-Q
Source: 0001213900-25-021742
Chunk: 68

Company: Stran & Company, Inc.
Filing Date: 2025-03-07
Form: 10-Q
Item: Part II, Item 8
Chunk 68
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 our business or the part of our business to which the long-lived assets
relate. We also consider market factors specific to the business and estimate future cash flows to be generated by the business, which
requires significant judgment as it is based on assumptions about market demand for our products over a number of future years. Based
on these assumptions and estimates, we determine whether we need to take an impairment charge to reduce the value of the long-lived assets
stated on our consolidated balance sheets to reflect their estimated fair value. Assumptions and estimates about future values and remaining
useful lives are complex and often subjective. They can be affected by a variety of factors, including external factors, such as the real
estate market, industry and economic trends, and internal factors, such as changes in our business strategy and our internal forecasts.
Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, changes in assumptions
and estimates could materially impact our reported financial results.

46

Contingent Earn-Out Liabilities

We measure our contingent earn-out liabilities
at fair value on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. The Black-Scholes-Merton
Call Option Formula was utilized to determine the fair value of the earn-out liability. The significant unobservable inputs used in the
fair value measurements are (i) the operating income projections (projected gross profit amounts within the risk-neutral framework) over
the earn-out period (generally three or five years), (ii) the strike price, and (iii) volatility. Significant increases or decreases to
any of these inputs in isolation would result in a significantly higher or lower liability, with a higher liability capped by the contractual
maximum of the contingent earn-out obligations. Ultimately, the liability will be equivalent to the amount paid, and the difference between
the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the contingent earn-out
liability on the acquisition date is reflected as cash used in financing activities in the consolidated statements of cash flows. Any
amount paid in excess of the contingent earn-out liability on the acquisition date is reflected as cash used in operating activities in
the consolidated statements of cash flows.

Recent Accounting Pronouncements

For a discussion of recently adopted accounting
pronouncements, see Recently Issued Accounting Pronouncements in Note A.18 to our financial statements beginning on page 1 of this
Quarterly Report on Form 10-Q