Company: SWAGW
Filing Date: 2025-02-11
Form Type: 10-Q
Source: 0001213900-25-011877
Chunk: 15

Company: Stran & Company, Inc.
Filing Date: 2025-02-11
Form: 10-Q
Item: Part I, Item 1
Chunk 15
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The
following include descriptions of the significant adjustments to the Company’s previously reported June 30, 2023 financial
statements included in this quarterly report.

1. Business Acquisitions

The Company incorrectly accounted for
the Wildman Imprints former promotional products business division of Wildman Business Group, LLC, G.A.P. Promotions, LLC, Trend Promotional
Marketing Corporation (d/b/a Trend Brand Solutions), Premier Business Services, and T R Miller Co., Inc. (“T R Miller”) acquisitions
(“Acquisitions”) as asset acquisitions that would properly be accounted for as business combinations in accordance with ASC
Topic 805, Business Combinations.

The Company improperly determined the
fair value of certain assets acquired and liabilities assumed and the fair value of contingent earn-out payments, which was part of the
total consideration, in accordance with ASC Topic 820, Fair Value Measurement.

As a part of the restatement process,
the Company performed a separate assessment of each acquisition in accordance with the relevant guidance of ASC Topic 805, Business Combinations,
and completed a purchase price allocation analysis, including the proper calculation 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