Company: SWAGW
Filing Date: 2025-03-07
Form Type: 10-Q
Source: 0001213900-25-021742
Chunk: 11

Company: Stran & Company, Inc.
Filing Date: 2025-03-07
Form: 10-Q
Item: Part II, Item 8
Chunk 11
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 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.

13

STRAN & COMPANY,
INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)

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.

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. 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 year 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 of the improper methods for both 2021 and 2022. In
addition, the Company plans to amend its 2023 U.S. federal income tax return, which will include a statement explaining additional adjustments
such as charitable contributions and stock option expense to its