Company: SWAGW
Filing Date: 2025-03-07
Form Type: 10-Q
Source: 0001213900-25-021742
Chunk: 104

Company: Stran & Company, Inc.
Filing Date: 2025-03-07
Form: 10-Q
Item: Part I, Item 1
Chunk 104
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 every year or whenever events or circumstances
indicate that the carrying amount may not be recoverable.

10

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

To determine whether goodwill is
impaired, annually or more frequently if needed, the Company performs a multi-step impairment test. Impairment testing is conducted
at the reporting unit level. The Company first has the option to assess qualitative factors to determine if it is more likely than
not that the carrying value of its reporting units exceeds its estimated fair value. Under ASC 350, Intangibles - Goodwill and
Other, the qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic
conditions, and changes in projected future cash flows or planned revenue or earnings of the reporting unit as potential indicators
when determining the need for a quantitative assessment of impairment. The Company may also elect to skip the qualitative testing
and proceed directly to the quantitative testing. When performing quantitative testing, the Company first estimates the fair values
of its reporting units using a combination of an income and market approach. To determine fair values, the Company is required to
make assumptions about a wide variety of internal and external factors. Significant assumptions used in the impairment analysis
include financial projections of discounted cash flow (including significant assumptions about operations including the rate
of future revenue growth, capital requirements, and income taxes), long-term growth rates for determining terminal value, and
discount rates. Comparative market multiples are used to corroborate the results of the discounted cash flow test. These assumptions
require significant judgement. The single step is to determine the estimated fair value of the reporting units and compare it to the
carrying values of the reporting units, including goodwill. If we conclude based on our qualitative assessment that it is more
likely than not that the fair value of the reporting units is less than their carrying value, we then measure the fair value of the
reporting units and compare their fair value to the carrying value (Step 1 of the goodwill impairment test). The Company also
completes a reconciliation between the implied equity valuation prepared and the Company’s market capitalization. The majority
of the inputs used in the discounted cash flow model are unobservable and thus are considered to be Level 3 inputs. The inputs for
the market capitalization calculation are considered Level 1 inputs.

The Company’s trade names are expected
to generate cash flows indefinitely