Company: SWAGW
Filing Date: 2025-08-12
Form Type: 10-Q
Source: 0001213900-25-074995
Chunk: 338

Company: Stran & Company, Inc.
Filing Date: 2025-08-12
Form: 10-Q
Item: Part II, Item 8
Chunk 338
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 subject to review by tax
authorities.

The Company’s effective tax
rate for the three months ended June 30, 2025, and 2024 was 15.1% and (0.3%) respectively. The Company’s effective tax rate for
the six months ended June 30, 2025, and 2024 was 23.3% and (0.2%) 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 estimated earnings and a partial release of
the valuation allowance from period to period. The Company recorded a full valuation allowance in 2022 and continues to maintain a cumulative
loss.

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 valuation models require the input of assumptions.
The fair value of stock-based payment awards was estimated using the Black-Scholes option model with a volatility figure derived from
an index of historical stock prices for comparable entities. For warrants and stock options issued to non-employees, the Company accounts
for the expected life based on the contractual life of the warrants and stock options. For employees, the Company accounts for the expected
life of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined
in the accounting standards codification. The risk-free interest rate was determined from the implied yields of U.S. Treasury zero-coupon
bonds with a remaining life consistent with the expected term of the options.

11

STRAN & COMPANY, INC.

NOTES TO THE UNAUDITED CONDENSE