Company: SWAGW
Filing Date: 2025-02-11
Form Type: 10-Q
Source: 0001213900-25-011877
Chunk: 292

Company: Stran & Company, Inc.
Filing Date: 2025-02-11
Form: 10-Q
Item: Part II, Item 8
Chunk 292
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 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 the 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. 

12

STRAN & COMPANY, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

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 of the improper methods for both 2021 and 2022. In
addition, the Company plans to amend its