Company: SWAGW
Filing Date: 2025-02-11
Form Type: 10-Q
Source: 0001213900-25-011877
Chunk: 16

Company: Stran & Company, Inc.
Filing Date: 2025-02-11
Form: 10-Q
Item: Part I, Item 1
Chunk 16
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 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. 

12

STRAN & COMPANY, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

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 June 30, 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.

4. Related Party Presentation

Certain amounts relating to the accounts
receivable from related parties, previously reflected in Accounts Receivable, Net on the Company’s Balance Sheet, have been reclassified
to Accounts Receivable – Related Parties. These reclassifications had no impact on the previously reported net earnings, cash flows
or shareholders’ equity.

5. 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 June 30, 2023, rather than reducing Unearned Revenue
for the customer deposits that were received prior to June 30, 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.

6. Sales Adjustment

The Company