Company: SWAGW
Filing Date: 2025-02-11
Form Type: 10-Q
Source: 0001213900-25-011872
Chunk: 226

Company: Stran & Company, Inc.
Filing Date: 2025-02-11
Form: 10-Q
Item: Part II, Item 8
Chunk 226
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. GAAP in connection with the Company’s accounting of certain assets and liabilities as well
as acquisition accounting. As a result of the re-audit, the Audit Committee, in consultation with the Company’s management, concluded
that the Company’s previously issued unaudited consolidated financial statements and the notes thereto as of and for the three
months ended March 31, 2023 require restatement and should not be relied upon.

The following include descriptions
of the significant adjustments to the Company’s previously reported March 31, 2023 financial statements included in this quarterly
report.

1. Business Acquisitions

The Company incorrectly accounted
for the Wildman, GAP, Trend, Premier and 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 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