Company: SWAGW
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001213900-25-109289
Chunk: 7

Company: Stran & Company, Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part II, Item 8
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the U.S. Internal Revenue Code, the usage of the Company’s NOL carryforwards may be subject to annual limitations to the extent
that greater than 50% ownership changes have occurred. Tax returns for the years ended 2021 through 2025 are subject to review by tax
authorities.

The Company’s effective tax rate
for the three months ended September 30, 2025 and 2024 was (5.5%) and (0.1%), respectively. The Company’s effective tax rate for
the nine months ended September 30, 2025 and 2024 was 0.4% and 0.1% respectively. The change in the effective tax rate from the comparison
of similar periods in 2025 versus 2024, as noted above, primarily relates to the Company’s earnings and a partial release of the
valuation allowance from period to period. The Company has recognized a full valuation allowance on its gross deferred tax assets less
its deferred tax liabilities.

On July 4, 2025, the One Big Beautiful
Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes several significant tax provisions, such as the permanent
extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration
of certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented
through 2027. The Company does not expect the enactment of OBBBA to have a material impact on its consolidated financial statements.

14.Stock-Based Compensation - The Company accounts for its stock-based awards in accordance with ASC 718,
Compensation - Stock Compensation. This guidance requires all stock-based payments to employees to be recognized in the unaudited condensed
consolidated statements of operations based on their fair values. The Company uses the Black-Scholes option pricing model to determine
the fair value of options granted. The Company has elected to account for forfeitures as they occur. The Company is recognizing compensation
costs only for those stock-based awards expected to vest. Cumulative compensation expense is at least equal to the compensation expense
for vested awards. Stock-based compensation is recognized on a straight-line basis over the service period of each award. The Company
records compensation cost as an element of general and administrative expense in the accompanying unaudited condensed consolidated statements
of operations.

15.Stock Option and Warrant Valuation - Stock option and warrant