Company: SWAGW
Filing Date: 2025-02-11
Form Type: 10-Q
Source: 0001213900-25-011877
Chunk: 65

Company: Stran & Company, Inc.
Filing Date: 2025-02-11
Form: 10-Q
Item: Part I, Item 1
Chunk 65
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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.16 to our financial statements beginning on page 1 of this
Quarterly Report on Form 10-Q.

 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable. 

 ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our
Chief Executive Officer and Chief Financial Officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) prior to the filing of this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure
controls and procedures were not effective due to the following material weaknesses in our internal control over financial reporting:

●There was a material weakness in our internal controls related to the proper design and implementation
of control over formal review, approval, and evaluation of complex accounting transactions associated with business combinations.

●We identified a material weakness in internal control related to the proper design and