Company: SWAGW
Filing Date: 2025-02-11
Form Type: 10-Q
Source: 0001213900-25-011872
Chunk: 227

Company: Stran & Company, Inc.
Filing Date: 2025-02-11
Form: 10-Q
Item: Part II, Item 8
Chunk 227
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 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 2021 and 2022 net operating loss carryforward
balances. All tax entries have been booked as of March 31, 2024 and 2023, to reflect the correct income tax provision and deferred tax
asset/(liability) balances. The Company recorded a valuation allowance as well in 2022 as the Company was in a cumulative deficit at
that time. 

12

4. Accounts Receivable and Unearned
Revenue Adjustment

The Company incorrectly recorded certain
amounts in Accounts Receivable for products that were shipped but not billed as of March 31, 2023, rather than reducing Unearned Revenue
for the customer deposits that were received prior to March 31, 2023.

As a part of the restatement process,
the Company performed reconciliations of unbilled receivables and unearned revenue and adjusted overstated Accounts Receivable and Unearned
Revenue balances.

5. Sales Adjustment

The Company incorrectly recognized
Sales relating to freight charges for certain orders.

As a part of the restatement process,
the Company conducted a thorough analysis of sales including freight charges. Multiple reviews were carried out to ensure all potential
errors were addressed.

To correct the error, the Company