Company: SWAGW
Filing Date: 2025-04-14
Form Type: 10-K
Source: 0001213900-25-031596
Chunk: 1714

Company: Stran & Company, Inc.
Filing Date: 2025-04-14
Form: 10-K
Item: Item 8
Chunk 1714
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 - The Company accounts for warrants as either equity-classified or liability-classified
instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing
Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers
whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480,
and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed
to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in
a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires
the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while
the warrants are outstanding.

26.Contingent Earn-Out Liabilities - The Company measures its contingent earn-out liabilities at fair value
on a recurring basis using significant unobservable inputs classified within Level 3 of the fair value hierarchy. The significant unobservable inputs used in the
fair value measurements are (i) the operating income projections (projected gross profit amounts within the risk-neutral framework) over
the earn-out period (generally three or five years), (ii) the strike price, and (iii) volatility. Significant increases or decreases to
any of these inputs in isolation would result in a significantly higher or lower liability, with a higher liability capped by the contractual
maximum of the contingent earn-out obligations. Ultimately, the liability will be equivalent to the amount paid, and the difference between
the fair value estimate and amount paid will be recorded in earnings. The amount paid that is less than or equal to the contingent earn-out
liability on the acquisition date is reflected as cash used in financing activities in the consolidated statements of cash flows. Any
amount paid in excess of the contingent earn-out liability on the acquisition date is reflected as cash used in operating activities in
the consolidated statements of cash flows.

F-14

STRAN & COMPANY, INC.

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

27.Reclassifications - Certain immaterial reclassifications have been made to the Company’s previously issued consolidated financial statements. These reclassifications had no impact on previously reported net income, cash flows or shareholders’ equity