Stran Company Inc

Previous wording

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our,” and the “Company” are to Stran & Company, Inc., a Nevada corporation, and its consolidated subsidiaries; references to “Stran” or “Stran & Company, Inc.” are to Stran & Company, Inc., a Nevada corporation; and references to “Stran Loyalty Solutions” or “SLS” are to Stran Loyalty Solutions, LLC, a Nevada limited liability company and a wholly-owned subsidiary of Stran & Company, Inc.

Current wording

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our,” and the “Company” are to Stran & Company, Inc., a Nevada corporation, and its consolidated subsidiaries; references to “Stran” or “Stran & Company, Inc.” are to Stran & Company, Inc., a Nevada corporation; references to “Stran Loyalty Solutions” or “SLS” are to Stran Loyalty Solutions, LLC, a Nevada limited liability company and a wholly-owned subsidiary of Stran & Company, Inc.; and references to “Gander Group Louisiana” are to Gander Group Louisiana, LLC, a Louisiana limited liability company, a wholly owned subsidiary of Stran Loyalty Solutions.

Previous wording

For the Stran & Company, Inc. operating segment, the majority of our revenue is derived from program business, although only a small percentage of our customers are considered programmatic. For the three and nine months ended September 30, 2024, program clients accounted for 83.2% and 83.6% of total revenue, respectively. For the three and nine months ended September 30, 2023, program clients accounted for 80.5% and 79.8% of total revenue, respectively. Fewer than 350 of our more than 2,000 active customers are considered to be program clients. Our active customers are any organizations, businesses, or divisions of a parent organization which have purchased directly or indirectly from us within the last two years, and include organizations that have bought from other organizations for which Stran acts as an established sub-contractor. We define transactional customers as customers that place an order with us and do not have an agreement with us covering ongoing branding requirements. We define program clients as clients that have a contractual obligation for specific ongoing branding needs. Program offerings include ongoing inventory, use of technology platform, warehousing, creative services, and additional client support. Those program customers are geared towards longer-lasting relationships that help secure recurring revenue well into the future.

Current wording

The majority of our revenue is derived from program business, although only a small percentage of our customers are considered programmatic. For the three months ended March 31, 2025 and 2024, program clients accounted for 83.8% and 86.0% of total revenue, respectively. Fewer than 350 of our more than 2,000 active customers are considered to be program clients. Our active customers are any organizations, businesses, or divisions of a parent organization which have purchased directly or indirectly from us within the last two years, and include organizations that have bought from other organizations for which Stran acts as an established sub-contractor. We define transactional customers as customers that place an order with us and do not have an agreement with us covering ongoing branding requirements. We define program clients as clients that have a contractual obligation for specific ongoing branding needs. Program offerings include ongoing inventory, use of technology platform, warehousing, creative services, and additional client support. Those program customers are geared towards longer-lasting relationships that helps secure recurring revenue well into the future.

Previous wording

Our sales increased 2.4% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, and increased 4.9% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which we believe was primarily due to higher spending from existing clients as well as business from new customers. We benefited from the acquisition of the assets of T R Miller Co., Inc., a Massachusetts corporation, or T R Miller, in June 2023, and from the acquisition of the assets (the “Gander Group Assets”) of Bangarang Enterprises, LLC, a California limited liability company (d/b/a Gander Group) (“Gander Group”), in August 2024.

Current wording

Our sales for the three months ended March 31, 2025 increased 52.4%compared to sales for the three months ended March 31, 2024, which we believe was primarily due to higher spending from existing clients as well as business from new customers. We also benefited from the acquisition of substantially all of the assets (the “Gander Group Assets”) of Bangarang Enterprises, LLC, a California limited liability company (d/b/a Gander Group) (“Gander Group”), in August 2024.

Previous wording

As of September 30, 2024, we had approximately $48.8 million of total assets with approximately $32.3 million of total stockholders’ equity.

Current wording

As of March 31, 2025, we had approximately $52.2 million of total assets with approximately $31.3 million of total stockholders’ equity.

Previous wording

Sales consist primarily of the selling price of the merchandise, service or outbound shipping and handling charges, less discounts, coupons redeemed, returns and credits. Sales by segment were as follows:

Current wording

Sales consist primarily of the selling price of the merchandise, service or outbound shipping and handling charges, less discounts, coupons redeemed, returns and credits. Sales by segment and in total were as follows (in thousands):

Previous wording

Our sales increased 4.9%to approximately$55.7 millionfor the nine months ended September 30, 2024, from approximately$53.1 millionfor the nine months ended September 30, 2023. The increase was primarily due to higher spending from existing clients as well as business from new customers. For the Stran segment, the decrease was primarily due to lower spending from new and existing clients. For the SLS segment, the increase was due to the acquisition of the Gander Group Assets in August 2024.

Current wording

Our total sales increased 52.4% to approximately$28.7 millionfor the three months ended March 31, 2025, from approximately$18.8 millionfor the three months ended March 31, 2024. Sales by our Stran segment increasedto approximately $20.9 million for the three months ended March 31, 2025 from approximately $18.8 million for the three months ended March 31, 2024. Sales by our SLS segment (which consists of the former Gander Group business) increased to approximately$7.8 million for the three months ended March 31, 2025 from $0 for the three months ended March 31, 2024. For the Stran segment, the increase in sales was primarily due to higher spending from existing clients as well as business from new customers. For the SLS segment, the increase in sales was due to the acquisition of the Gander Group Assets in August 2024.

Previous wording

Cost of sales by segment and in total were as follows:

Current wording

Cost of sales by segment and in total were as follows (in thousands):

Previous wording

Our total cost of sales increased 6.9%to approximately$14.2 millionfor the three months ended September 30, 2024, from approximately$13.3 millionfor the three months ended September 30, 2023. As a percentage of sales, cost of sales increased to 70.5% for the three months ended September 30, 2024 from 67.5% for the three months ended September 30, 2023. The increase in the dollar amount of cost of sales was primarily due to the increase in sales of 2.4% from period to period. For the Stran segment, the decrease was primarily dueto a decrease in sales of approximately $3.0 million for the reasons described above. For the SLS segment, the increase was due to the acquisition of the Gander Group Assets in August 2024.

Current wording

Our total cost of sales increased 53.0%to approximately$20.2 millionfor the three months ended March 31, 2025, from approximately$13.2 millionfor the three months ended March 31, 2024. As a percentage of sales, total cost of sales increased to 70.4% for the three months ended March 31, 2025 from 70.2% for the three months ended March 31, 2024. Cost of sales by our Stran segment increased to approximately$14.1 million for the three months ended March 31, 2025 from approximately $13.2 million for the three months ended March 31, 2024. Cost of sales by our SLS segment increased to approximately $6.1 million for the three months ended March 31, 2025 from $0 for the three months ended March 31, 2024. The increase in the dollar amount of total cost of sales was primarily due to the increase in sales of 52.4% from period to period. For the Stran segment, the increase was primarily due to the increase in sales described above. For the SLS segment, the increase was due to the acquisition of the Gander Group Assets in August 2024.

Previous wording

Gross profit and gross margin percentages by segment and in total were as follows:

Current wording

Gross profit and gross margin percentages by segment and in total were as follows (in thousands):

Previous wording

Gross profit consists of sales less total costs of sales. Our gross profit decreased 7.0%to approximately$6.0 million, or 29.5%of sales, for the three months ended September 30, 2024, from approximately$6.4 million, or 32.5%of sales, for the three months ended September 30, 2023. For the Stran segment, the decrease in the dollar amount of gross profit was due to a decrease in sales of approximately $3.0 million for the reasons described above, which was partially offset by a decrease in cost of sales of approximately $1.9 million for the reasons described above. The decrease in gross profit margin for the Stran segment to 31.8% for the three months ended September 30, 2024 compared to 32.5% for the three months ended September 30, 2023 was primarily due to increases in product costs from vendors. For the SLS segment, the increase in the dollar amount was due to the acquisition of the Gander Group Assets in August 2024.

Current wording

Gross profit consists of sales less total cost of sales. Our total gross profit increased 51.1%to approximately$8.5 million, or 29.6%of sales, for the three months ended March 31, 2025, from approximately$5.6 million, or 29.8%of sales, for the three months ended March 31, 2024. Gross profit of our Stran segment increased to approximately $6.8 million for the three months ended March 31, 2025 from approximately $5.6 million for the three months ended March 31, 2024. Gross profit of our SLS segment increased to approximately $1.7 million for the three months ended March 31, 2025 from $0 for the three months ended March 31, 2024. The increase in the dollar amount of total gross profitwas primarily due to the acquisition of the Gander Group Assets in August 2024. For the Stran segment, the increasein the dollar amount of gross profit was due to an increase in sales of approximately $2.1 million for the reasons described above, which was partially offset by an increase of cost of sales of approximately $0.9 million for the reasons described above. For the SLS segment, the increase in the dollar amountof gross profitwas due to the acquisition of the Gander Group Assets in August 2024. The decrease in total gross profit margin to 29.6% for the three months ended March 31, 2025 from 29.8% for the three months ended March 31, 2024 was primarily due to the acquisition of the Gander Group Assets in August 2024, which operates at a lower gross margin than the Stran segment. The gross profit margin for the Stran segment increased to 32.4% for the three months ended March 31, 2025 from 29.8% for the three months ended March 31, 2024. The gross profit margin for the SLS segment was 21.8% for the three months ended March 31, 2025.

Previous wording

Operating expenses by segment and in total were as follows:

Current wording

Operating expenses by segment and in total were as follows (in thousands):

Previous wording

Operating expenses consist of general and administrative expenses. Our operating expenses increased 41.9%to approximately$8.1 millionfor the three months ended September 30, 2024, from approximately$5.7 millionfor the three months ended September 30, 2023. As a percentage of sales, operating expenses increased to 40.4% for the three months ended September 30, 2024, from 29.1% for the three months ended September 30, 2023. For the Stran segment, the increase in the dollar amount of operating expenses was primarily due to expenses related to Stran’s NetSuite enterprise resource planning system implementation, acquisition and integration of the Gander Group Assets, and legal and accounting expenses related to the re-audit of historical financial statements. For the SLS segment, the increase was due to the acquisition the Gander Group Assets in August 2024.

Current wording

Operating expenses consist of general and administrative expenses. Our total operating expenses increased 43.6% to approximately $9.0 million for the three months ended March 31, 2025, from approximately $6.3 million for the three months ended March 31, 2024. Operating expenses of our Stran segment increased to approximately $6.9 million for the three months ended March 31, 2025 from approximately $6.3 million for the three months ended March 31, 2024. Operating expenses of our SLS segment increased to approximately $2.2 million for the three months ended March 31, 2025 from $0 for the three months ended March 31, 2024. As a percentage of sales, operating expenses decreased to 31.4% for the three months ended March 31, 2025, from 33.4% for the three months ended March 31, 2024. As a percentage of sales, operating expenses of our Stran segment decreased to 32.8% for the three months ended March 31, 2025 from 33.4% for the three months ended March 31, 2024. As a percentage of sales, operating expenses of our SLS segment were 27.7% for the three months ended March 31, 2025. For the Stran segment, the increase in the dollar amount of operating expenses was primarily due to expenses related to Stran's NetSuite enterprise resource planning system implementation, acquisition and integration of the Gander Group Assets, and legal and accounting expenses related to the re-audit of historical financial statements. For the SLS segment, the increase in the dollar amount of operating expenses was due to the acquisition of the Gander Group Assets in 2024.

Previous wording

Other income consists of other income (expense), interest income, and realized gain on investments. Our other expense was approximately$22 thousandfor the three months ended September 30, 2024, compared to other income of approximately$202 thousand for the three months ended September 30, 2023. This change was primarily due to noncash accretion expense related to certain installment payment liabilities. Our interest income was approximately$64 thousandfor the three months ended September 30, 2024, compared to approximately$183 thousandfor the three months ended September 30, 2023. This change was primarily due to a decrease in interest generated from investments. Our realized gain on investments was approximately$103 thousand for the three months ended September 30, 2024, compared to approximately$77 thousand for the three months ended September 30, 2023. This change was primarily due to the sale of investments above their initial value.

Current wording

Other (expense) income consists of other income, interest income, change in fair value of contingent earn-out liability, and realized gain on investments. Our other (expense) income was approximately$(5)thousandfor the three months ended March 31, 2025, compared to approximately$15 thousand for the three months ended March 31, 2024. This change was primarily due to factoring fees. Our interest income was approximately$42 thousandfor the three months ended March 31, 2025, compared to approximately$93 thousandfor the three months ended March 31, 2024. This change was primarily due to a decrease in interest generated from investments. Our realized gain on investments was approximately $67 thousand for the three months ended March 31, 2025, compared to approximately$70 thousand for the three months ended March 31, 2024.

Previous wording

Income tax provision for the three months ended September 30, 2024 was approximately $(1) thousand compared to income tax provision of approximately $(0.1) million for the three months ended September 30, 2023. Income tax provision for the three months ended September 30, 2024 accounted for 0.1% of loss before income taxes of approximately $2.0 million. Income tax provision for the three months ended September 30, 2023 accounted for 12.0% of income before income taxes of approximately $1.1 million. As of September 30, 2024 and 2023, the Company recorded an income tax provision comprised of state income taxes and a valuation allowance against its net deferred tax assets as well as a minimum state tax liability. The company recorded a valuation allowance since its generated a deficit over a three-year cumulative period.

Current wording

Income tax benefit for the three months ended March 31, 2025 was approximately $(38) thousand compared to income tax provision of approximately $— thousand for the three months ended March 31, 2024. Income tax provision for the three months ended March 31, 2025 accounted for 8.9% of loss before income taxes of approximately $0.4 million. Income tax provision for the three months ended March 31, 2024 accounted for —% of income before income taxes of approximately $0.5 million. As of March 31, 2025 and 2024, the Company recorded an income tax provision comprised of state income taxes and a valuation allowance against its net deferred tax assets. The Company recorded a valuation allowance due to a cumulative loss over a three-year period.

Previous wording

Our net loss for the three months ended September 30, 2024 was approximately $2.0 million, compared to net profit of approximately $1.3 million for the three months ended September 30, 2023. This change was primarily due to the increase in operating expenses along with the decrease in gross profit for the reasons described above.

Current wording

Our net loss for the three months ended March 31, 2025 was approximately $0.4 million, compared to approximately $0.5 million for the three months ended March 31, 2024. This change was primarily due to an increase in gross profit, partially offset by an increase in operating expenses, for the reasons described above.

Previous wording

As of September 30, 2024, we had cash and cash equivalents of approximately$10.0 million and investments of approximately$6.9 million. We have financed our operations primarily through cash generated from our initial public offering of common stock and warrants to purchase common stock in November 2021, our private placement of common stock and warrants to purchase common stock in December 2021, and operations.

Current wording

As of March 31, 2025, we had cash and cash equivalents of approximately$4.2 million and investments of approximately$7.9 million. We have financed our operations primarily through cash generated from our initial public offering of common stock and warrants to purchase common stock in November 2021, our private placement of common stock and warrants to purchase common stock in December 2021, and operations.

Previous wording

The following table provides detailed information about our net cash flows for the nine months ended September 30, 2024 and 2023.

Current wording

The following table provides detailed information about our net cash flows for the three months ended March 31, 2025 and 2024.

Previous wording

Net cash provided by operating activities was approximately $1.4 million for the nine months ended September 30, 2024, as compared to net cash used in operating activities of approximately $1.6 million for the nine months ended September 30, 2023. The change was primarily due to a decrease in accounts receivable.

Current wording

Net cash used in operating activities was approximately $5.9 million for the three months ended March 31, 2025, as compared to net cash provided by operating activities of approximately $2.1 million for the three months ended March 31, 2024. The change was primarily due to a decrease in rewards program liability.

Previous wording

Net cash provided by investing activities was approximately $1.5 million for the nine months ended September 30, 2024, as compared to net cash used in investing activities of approximately $3.4 million for the nine months ended September 30, 2023. The change was primarily due to increased proceeds from the sale of investments, partially offset by increased purchases of investments.

Current wording

Net cash provided by investing activities was approximately $0.8 million for the three months ended March 31, 2025, as compared to net cash used in investing activities of approximately $0.6 million for the three months ended March 31, 2024. The change was primarily due to proceeds from the sale of investments.

Previous wording

Net cash used in financing activities was approximately $1.0 million for the nine months ended September 30, 2024, as compared to approximately $0.9 million for the nine months ended September 30, 2023. The increase in net cash used in financing activities was primarily due to reduced payments of contingent earn-out liabilities and increased payments of installment payment liabilities.

Current wording

Net cash used in financing activities was approximately $0.04 million for the three months ended March 31, 2025, as compared to approximately $0.1 million for the three months ended March 31, 2024. The decrease in net cash used in financing activities was primarily due to decreased payments of installment payment liabilities.

Previous wording

Under the Security Agreement and the other Loan Documents, the Company granted Salem Five Cents a first priority security interest in all of its assets, including both assets owned as of the date of the Revolving Line of Credit and afterwards, as collateral for full repayment of the Revolving Line of Credit. Salem Five Cents had the right to file Uniform Commercial Code financing statements with any jurisdiction and with sufficient descriptions of the property to perfect its security interest in all of the Company’s current and future assets. Upon default of the Revolving Line of Credit, Salem Five Cents could accelerate repayment of the Revolving Line of Credit, take possession of the Company’s assets, assign a receiver over the Company’s assets, and enforce other rights as to the Company’s assets as secured creditor. The Company was required to pay for all of Salem Five Cents’s reasonable legal fees and expenses incurred to enforce its rights under the Loan Documents.

Current wording

Under the Security Agreement and the other Loan Documents, the Company granted Salem Five Cents a first priority security interest in all of its assets, including both assets owned as of the date of the Revolving Line of Credit and afterwards, as collateral for full repayment of the Revolving Line of Credit. Salem Five Cents had the right to file Uniform Commercial Code financing statements with any jurisdiction and with sufficient descriptions of the property to perfect its security interest in all of the Company’s current and future assets. Upon default of the Revolving Line of Credit, Salem Five Cents could accelerate repayment of the Revolving Line of Credit, take possession of the Company’s assets, assign a receiver over the Company’s assets, and enforce other rights as to the Company’s assets as secured creditor. The Company was required to pay for all of Salem Five Cents’ reasonable legal fees and expenses incurred to enforce its rights under the Loan Documents.

Previous wording

As of September 30, 2024, the Revolving Line of Credit had been terminated. As of December 31, 2023, we had not drawn any funds from the Revolving Line of Credit.

Current wording

As of March 31, 2025 and December 31, 2024, the Revolving Line of Credit had been terminated.

Previous wording

On August 23, 2024, Stran Loyalty Solutions entered into a Secured Party Sale Agreement, dated as of August 23, 2024 (the “Sale Agreement”), between Stran Loyalty Solutions and Sallyport Commercial Finance, LLC, a Delaware limited liability company (“Secured Party”), pursuant to which Stran Loyalty Solutions agreed to purchase, on an as-is basis, all of the rights and interests of Gander Group, in and to substantially all of the assets of Gander Group (the “Gander Group Assets”) from Secured Party as a private sale pursuant to Article 9 of the Uniform Commercial Code (the “Gander Group Transaction”).

Current wording

On August 23, 2024, Stran Loyalty Solutions entered into a Secured Party Sale Agreement, dated as of August 23, 2024 (the “Sale Agreement”), between Stran Loyalty Solutions and Sallyport Commercial Finance, LLC, a Delaware limited liability company (“Secured Party”), pursuant to which Stran Loyalty Solutions agreed to purchase, on an as-is basis, all of the rights and interests of Gander Group, in and to the Gander Group Assets from Secured Party as a private sale pursuant to Article 9 of the Uniform Commercial Code (the “Gander Group Transaction”).

Previous wording

At the consummation of the transactions contemplated by the Sale Agreement (the “Gander Group Transaction Closing”), Stran Loyalty Solutions paid the Cash Purchase Price, including the payment of the Transaction Expense Payment, and assumed the Gander Group Assumed Liabilities. As a result of the Gander Group Transaction Closing, the Company indirectly acquired substantially all of the assets of Gander Group, including all of the equity of Gander Group Louisiana, LLC, a Louisiana limited liability company, which became a wholly-owned subsidiary of Stran Loyalty Solutions.

Current wording

At the consummation of the transactions contemplated by the Sale Agreement (the “Gander Group Transaction Closing”), Stran Loyalty Solutions paid the Cash Purchase Price, including the payment of the Transaction Expense Payment, and assumed the Gander Group Assumed Liabilities. As a result of the Gander Group Transaction Closing, the Company indirectly acquired substantially all of the asset of Gander Group, including all of the equity of Gander Group Louisiana, which became a wholly-owned subsidiary of Stran Loyalty Solutions.

Previous wording

On January 10, 2025, the Company entered into a seven-year lease agreement for office space in North Quincy, Massachusetts. The Company’s existing lease agreement for its office space expires May 31, 2025. The new lease term begins on June 1, 2025 and expires on May 31, 2032 with an option to extend the lease an additional five years. The lease contains an initial base rent of approximately $21 thousand per month with 2.2% - 2.5% annual escalations, plus a percentage of taxes and operating expenses incurred by the lessor in connection with the ownership and management of the property.

Current wording

On January 10, 2025, the Company entered into a seven-year lease agreement for new office space in North Quincy, Massachusetts. The Company’s existing lease agreement for its office space expires May 31, 2025. The new lease term begins on June 1, 2025 and expires on May 31, 2032 with an option to extend the lease an additional five years. The lease contains an initial base rent of approximately $21 thousand per month with 2.2% - 2.5% annual escalations, plus a percentage of taxes and operating expenses incurred by the lessor in connection with the ownership and management of the property.

Previous wording

Lease costs for the three months ended September 30, 2024 and 2023 totaled approximately $0.2 million and $0.2 million, respectively. Lease costs for the nine months ended September 30, 2024 and 2023 totaled approximately $0.5 million and $0.4 million, respectively. We anticipate no deficiencies in our ability to make these payments.

Current wording

Lease costs for the three months ended March 31, 2025 and 2024 totaled approximately$0.2 million and $0.2 million, respectively. We anticipate no deficiencies in our ability to make these payments.

Previous wording

The Company manages reward card programs for clients. Under these programs, the Company receives cash and simultaneously records a liability for the total amount received. These accounts are adjusted on a periodic basis as reward cards are funded or reduced at the direction of the customers. As of September 30, 2024 and December 31, 2023, the Company had net deposits totaling approximately $3.0 million and $0.9 million, respectively.

Current wording

The Company manages reward card programs for clients. Under these programs, the Company receives cash and simultaneously records a liability for the total amount received. These accounts are adjusted on a periodic basis as reward cards are funded or reduced at the direction of the customers. As of March 31, 2025 and December 31, 2024, the Company had net deposits totaling approximately $0.9 million and $0.4 million, respectively.

Previous wording

We perform an annual impairment review of our goodwill and indefinite-lived intangible assets during the fourth fiscal quarter of each year, and more frequently if we believe indicators of impairment exist. The process of evaluating the potential impairment of goodwill and indefinite-lived intangible assets is highly subjective and requires significant judgment. To review for impairment, we first assess qualitative factors to determine whether events or circumstances lead to a determination that it is more likely than not that the fair value of our reporting units are less than their carrying amounts. Our qualitative assessment of the recoverability of goodwill, whether performed annually or based on specific events or circumstances, considers various macroeconomic, industry-specific and company-specific factors. These factors include: (i) severe adverse industry or economic trends; (ii) significant company specific actions; (iii) current, historical or projected deterioration of our financial performance; or (iv) a sustained decrease in our market capitalization below our net book value. After assessing the totality of events and circumstances, if we determine that it is more likely than not that the fair value of our reporting units are greater than their carrying amounts, no further assessment is performed. If we determine that it is more likely than not that the fair value of our reporting units are less than their carrying amounts, we calculate the fair value of the reporting units and compare the fair value to the reporting units’ net book values.

Current wording

We perform an annual impairment review of our goodwill during the fourth fiscal quarter of each year, and more frequently if we believe indicators of impairment exist. The process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment. To review for impairment, we first assess qualitative factors to determine whether events or circumstances lead to a determination that it is more likely than not that the fair value of our reporting unit is less than its carrying amount. Our qualitative assessment of the recoverability of goodwill, whether performed annually or based on specific events or circumstances, considers various macroeconomic, industry-specific and company-specific factors. These factors include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions; (iii) current, historical or projected deterioration of our financial performance; or (iv) a sustained decrease in our market capitalization below our net book value. After assessing the totality of events and circumstances, if we determine that it is more likely than not that the fair value of our reporting unit to which goodwill is assigned is greater than its carrying amount, no further assessment is performed. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we calculate the fair value of that reporting unit and compare the fair value to the reporting unit’s net book value.

Previous wording

We assess the impairment of long-lived assets, including purchased property and equipment, right-of-use assets, and intangible assets, whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors we consider important which could trigger an impairment review include: (i) significant under performance relative to historical or projected future operating results, (ii) significant changes in the manner of our use of the acquired assets or the strategy for our overall business, or (iii) significant negative industry or economic trends. The process of evaluating the potential impairment of long-lived assets under the accounting guidance on property and equipment and intangible assets is also highly subjective and requires significant judgment. In order to estimate the fair value of long-lived assets, we typically make various assumptions about the future prospects of our business or the part of our business to which the long-lived assets relate. We also consider market factors specific to the business and estimate future cash flows to be generated by the business, which requires significant judgment as it is based on assumptions about market demand for our products over a number of future years. Based on these assumptions and estimates, we determine whether we need to take an impairment charge to reduce the value of the long-lived assets stated on our consolidated balance sheets to reflect their estimated fair value. Assumptions and estimates about future values and remaining useful lives are complex and often subjective. They can be affected by a variety of factors, including external factors, such as the real estate market, industry and economic trends, and internal factors, such as changes in our business strategy and our internal forecasts. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, changes in assumptions and estimates could materially impact our reported financial results.

Current wording

We assess the impairment of long-lived assets, including purchased property and equipment, right-of-use assets, and intangible assets, whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors we consider important which could trigger an impairment review include: (i) significant underperformance relative to historical or projected future operating results, (ii) significant changes in the manner of our use of the acquired assets or the strategy for our overall business, or (iii) significant negative industry or economic trends. The process of evaluating the potential impairment of long-lived assets under the accounting guidance on property and equipment and intangible assets is also highly subjective and requires significant judgment. In order to estimate the fair value of long-lived assets, we typically make various assumptions about the future prospects of our business or the part of our business to which the long-lived assets relate. We also consider market factors specific to the business and estimate future cash flows to be generated by the business, which requires significant judgment as it is based on assumptions about market demand for our products over a number of future years. Based on these assumptions and estimates, we determine whether we need to take an impairment charge to reduce the value of the long-lived assets stated on our consolidated balance sheets to reflect their estimated fair value. Assumptions and estimates about future values and remaining useful lives are complex and often subjective. They can be affected by a variety of factors, including external factors, such as the real estate market, industry and economic trends, and internal factors, such as changes in our business strategy and our internal forecasts. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, changes in assumptions and estimates could materially impact our reported financial results.