Creatd Inc.

11/12/2026 | Press release | Distributed by Public on 11/12/2026 07:06

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth in "Part I - Item 1A. Risk Factors" of the Company's most recent Annual Report.
These condensed consolidated financial statements and other reports filed by Creatd, Inc., (the "Company"), from time to time with the OTC or otherwise provided to current and prospective stakeholders (collectively, the "Filings") contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company's management as well as estimates and assumptions made by Company's management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words "anticipate," "believe," "estimate," "expect," "future," "intend," "plan," or the negative of these terms and similar expressions as they relate to the Company or the Company's management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company's business, industry, and the Company's operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our condensed consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management's judgment in its application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.
We intend for this discussion to provide information that will assist in understanding our condensed consolidated financial statements, the changes in certain key items in those condensed consolidated financial statements, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our condensed consolidated financial statements.
Overview
Creatd operates a diversified portfolio of businesses generating revenue across media, publishing. Our operations include direct-to-consumer product sales, subscription memberships, advertising, licensing, advisory services, and strategic investments. These businesses are supported by a shared operational infrastructure and a focus on monetizing first-party data, intellectual property, and scalable creative assets.
Results of Operations
Liquidity and Capital Resources
The following table summarizes total current assets, liabilities and working capital at September 30, 2026 compared to December 31, 2025:
September 30, 2026
December 31, 2025
Increase /
(Decrease)
Current Assets $ 5,662,782 $ 744,646 $ 4,918,136
Current Liabilities 2,984,911 7,562,858 (4,577,947)
Working Capital (Deficit) $ 2,677,871 $ (6,818,212) $ 9,496,083
At September 30, 2026, the Company had a working capital of $2,677,871 as compared to a working capital deficit of $6,818,212 at December 31, 2025, an increase in working capital of $9,496,083. The increase is primarily attributable to consideration received in connection with the March 2026 sale of the Company's interest in Fly Flyte, Inc., including the promissory note receivable and cash proceeds from the sale of the Series D Preferred Stock received as consideration, as well as the conversion and settlement of the Company's convertible notes and the related derivative liability, and a decrease in accounts payable and accrued liabilities resulting from the payment of vendor and credit card balances, accrued bonuses, legal fees and payroll taxes, and the settlement of accrued compensation
Net Cash
Net cash used in operating activities for the nine months ended September 30, 2026, was $3,858,435, as compared to net cash used in operating activities of $1,303,605 for the same period in 2025. The net loss for the nine months ended September 30, 2026, and 2025 was $20,161,579 and $5,071,919, respectively. Although the net loss increased period-over-period, approximately 83% of the loss for 2026 was largely non-cash in nature. Net loss of $20,161,579 includes operating activities of non-cash charges including stock-based compensation of $13,844,028, accretion of debt discount and issuance costs of $2,017,468 and $1,484,326 in unrealized losses on marketable securities, partially offset by a non-cash change in fair value of derivative liability of $673,693.
Net cash provided by investing activities for the nine months ended September 30, 2026, was $6,850,122, primarily attributable to the collections on the promissory note and cash received as consideration for the sale of Fly Flyte, Inc. and proceeds from sales of marketable securities, including the Series D Preferred Stock received as consideration. Comparatively, net cash used by investing activities for the nine months ended September 30, 2025, was $100,000.
Net cash used in financing activities for the nine months ended September 30, 2026 was $185,602, as compared to net cash provided by financing activities of $1,331,523 for the same period in 2025. During the nine months ended September 30, 2026, financing consisted of proceeds of $300,000 from a single convertible note issuance during the first quarter (see Note 6 - Convertible Notes Payable), along with proceeds from the issuance of notes payable and warrants of $164,500, offset by repayments of notes payable of $295,517. Additionally, during the nine months ended September 30, 2026, the Company repurchased a portion of interest in subsidiaries for a total cash amount of $263,691, which increased the Company's ownership in Vocal, Inc. to 51% and in OG Collection, Inc. to 83.5%, and repurchased Series G Preferred Stock for $86,853. See Note 8 - Stockholders' Equity for further detail on these transactions. The higher level of financing in the comparative 2025 period was primarily attributable to capital raised in connection with the acquisition of Fly Flyte, Inc., including proceeds from the issuance of preferred stock and common stock (see Note 10 - Acquisitions, Investments and Disposals).
Summary of Statements of Operations for the three and nine months ended September 30, 2026 and 2025:
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2026 2025 2026 2025
Revenue $ 226,054 $ 340,084 $ 603,722 $ 828,914
Cost of revenue 37,020 43,073 70,436 130,817
Operating expenses 3,040,924 1,698,665 18,016,332 6,649,778
Loss from operations (2,851,890) (1,401,654) (17,483,046) (5,951,681)
Other (expenses) income
(3,244) 3,039,841 (1,299,194) 4,504,705
Net loss attributable to noncontrolling interest (86,791) (780,017) (485,764) (949,567)
Net loss attributable to Creatd, Inc. common stockholders
(7,005,857) (928,183) (24,298,029) (5,634,043)
Loss per common share - basic and diluted $ (1.69) $ 3.82 $ (11.89) $ (3.95)
Revenue
Revenue was $226,054 and $603,722 for the three and nine months ended September 30, 2026, respectively, as compared to $340,084 and $828,914, respectively, for the three and nine months ended September 30, 2025. The decrease of $114,030 for the three months, and $225,192 for the nine months ended September 30, 2026 as compared to the same periods in 2025, was primarily attributable to the reduction in subscription and agency revenue, partially offset by an increase in services revenue.
Cost of Revenue
Cost of revenue for the three and nine months ended September 30, 2026, was $37,020 and $70,436, respectively, as compared to $43,073 and $130,817 for the three and nine months ended September 30, 2025, a decrease of $6,053 and $60,381, respectively. The majority of the balance in both periods reflects adjustments to the liability associated with unpaid balances in users' Vocal Wallets. During the nine months ended September 30, 2026, updated data indicated that a lower percentage of users were meeting the thresholds required to access their wallet balances, resulting in a downward revision to the estimated liability and a corresponding decrease to cost of revenue for the period. This revision was driven by shifts in user behavior and platform trends, including a continued reduction in the frequency of welcome bonuses and a decrease in the number of challenges and challenge winners on Vocal. The adjustment has been accounted for as a change in estimate on a prospective basis.
Operating Expenses
Operating expenses for the three and nine months ended September 30, 2026, were $3,040,924 and $18,016,332, respectively, as compared to $1,698,665 and $6,649,778, respectively for the three and nine months ended September 30, 2025. The increase of $1,342,259 from the three months ended September 30, 2025 to 2026, is in part attributable to stock based compensation expense of $1,095,876 in 2026, compared to $770,812 in 2025, and the increase in general and administrative expenses of $1,046,578, mainly attributable to legal and professional services expense incurred in 2026, in line with uplisting efforts.
For the nine months ended September 30, 2026 compared to 2025, the increase of $11,366,554 is primarily attributable to stock-based compensation expense of $13,844,028 recognized during the nine months ended September 30, 2026 in connection with stock option grants to officers, directors, employees, and consultants, with $4,080,995 in the prior period. Compensation expense decreased by $20,669, reflecting reduced compensation among three executives and the removal of one board member from payroll and also offset by the hiring of key employees in 2026. General and administrative expenses increased by $1,695,850, from $1,086,242 in 2025 to $2,782,092 in 2026, mainly attributable to legal and professional services expense incurred in 2026, in line with uplisting efforts.
Loss from Operations
Loss from operations for the three and nine months ended September 30, 2026, was $2,851,890 and $17,483,046, respectively, as compared to $1,401,654 and $5,951,681, respectively, for the three and nine months ended September 30, 2025, an increase of $1,450,236 in operating loss for the three months ended September 30, 2026, and an increase of $11,531,365 in operating loss for the nine months ended September 30, 2026. The change of $1,450,236 for the three months ended September 30, 2026 in comparison to 2025, was primarily driven by an increase in stock based compensation of $325,064, and an increase in general and administrative expenses of $1,046,578, attributable to legal and professional services expense incurred in 2026, in line with uplisting efforts, partially offset by a $164,056 decrease in marketing spend as compared to 2025. The change of $11,531,365 for the nine months ended September 30, 2026, in comparison to 2025, was primarily due to the increase in stock based compensation expense of $9,763,033, which rose from the $4,080,995 in the prior period to $13,844,028 in the current period.
Other Income/Expenses
Other income (expenses) for the three and nine months ended September 30, 2026, were $(3,244) and $(1,299,194), respectively, as compared to other income of $3,039,841 and $4,504,705, respectively for the three and nine months ended September 30, 2025, a change of $(3,043,085) and $(5,803,899), respectively. The change for the three months ended September 30, 2026 was primarily driven by a decrease of $1,552,568 in the gain on settlement of liabilities, a $727,323 gain on extinguishment of debt recognized in the prior comparative period that did not recur, and losses on marketable securities.
The change for the nine months ended September 30, 2026 was primarily driven by $1,967,695 of additional non-cash accretion of debt discount and issuance cost on the convertible notes issued in November 2025, an increase of $1,649,328 in non-cash unrealized losses on marketable securities, a decrease of $1,131,890 in the gain on settlement of liabilities, and $1,805,363 of non-recurring other income in the prior comparative period from an Employee Retention Credit and a gain on extinguishment of debt. These were partially offset by a $673,693 gain on the change in fair value of the derivative liability and interest income on the note receivable received in connection with the sale of Fly Flyte, Inc.
Net Loss
Net loss attributable to Creatd, Inc. for the three and nine months ended September 30, 2026, was $2,768,343 and $19,675,815, respectively, as compared to $779,746 and $4,122,352, respectively, for the three and nine months ended September 30, 2025. The changes in net loss are attributable to the items discussed in the preceding sections.
Off-Balance Sheet Arrangements
As of September 30, 2026, we had no off-balance sheet arrangements.
Significant Accounting Policies
We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this "Management's Discussion and Analysis of Financial Condition and Results of Operation."
Use of Estimates and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the consolidated financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. The Company uses estimates in accounting for, among other items, revenue recognition, allowance for doubtful accounts, stock-based compensation, income tax provisions, excess and obsolete inventory reserve, and impairment of intellectual property.
The Company also uses estimates in determining the liability associated with unpaid balances in user accounts ("Vocal Wallets") on its platform. These balances represent amounts earned by users for content views, bonuses, and contest winnings. However, due to various platform-specific contingencies-such as minimum withdrawal thresholds, third-party processor access, and account compliance requirements-not all users will be able to withdraw their full balances. The Company applies a weighted average methodology based on historical payout rates to estimate the proportion of wallet balances likely to be paid out. This estimate is updated each reporting period to reflect new trends in user behavior and
platform data. In the nine months ended September 30, 2026, updated data supported a downward revision of the estimated liability in the amount of $296,110, being recorded to cost of revenue on the condensed consolidated statements of operations and comprehensive loss.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The fair value measurement disclosures are grouped into three levels based on valuation factors:
•Level 1 - quoted prices in active markets for identical investments
•Level 2 - other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)
•Level 3 - significant unobservable inputs (including Company assumptions in determining the fair value of investments)
The Company's Level 1 assets/liabilities include cash, accounts receivable, accounts payable, prepaid and other current assets, line of credit and due to related parties. Management believes the estimated fair value of these accounts at September 30, 2026 approximate their carrying value as reflected in the condensed consolidated balance sheets due to the short-term nature of these instruments or the use of market interest rates for debt instruments.
The Company's Level 3 assets/liabilities include intangible assets and derivative liabilities. Inputs to determine fair value are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined by using model-based techniques, including option pricing models and discounted cash flow models. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.
Long-lived Assets Including Acquired Intangible Assets
The Company evaluates the recoverability of property and equipment, acquired finite-lived intangible assets, and purchased infinite life digital assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition.
Acquired finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. The Company routinely reviews the remaining estimated useful lives of property and equipment and finite-lived intangible assets. If the Company changes the estimated useful life assumption for any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life. As of September 30, 2026 and December 31, 2025, the Company has $19,597 and $28,043, respectively, of intangible assets on its condensed consolidated balance sheets. The decrease of $8,446 in intangible assets is all attributable to amortization of the intangibles during the nine months ended September 30, 2026. The intangible assets on the condensed consolidated balance sheets as of September 30, 2026 relate to the Company's July 2024 acquisition of Studio 96 Publishing.
The breakdown of intangible assets, net of amortization, as of September 30, 2026 was as follows:
Asset Description Amount
Customer Relations $ 3,978
Know-How and Intellectual Property 10,608
Website & Apps 5,011
Total Intangible Assets $ 19,597
Amortization expense was $2,878 and $6,630 for the three months ended September 30, 2026 and 2025, respectively. Amortization expense was $8,445 and $19,892 for the nine months ended September 30, 2026 and 2025, respectively.
Minority equity investments
Minority equity investments in private companies in which the Company holds a passive ownership interest and does not exercise significant influence are accounted for using the cost method in accordance with ASC 321. These investments are recorded on the condensed consolidated balance sheets as long-term assets under Minority investment in business. The carrying value of such investments is initially recognized at cost and is assessed periodically for impairment or other indicators that the investment may no longer be recoverable. Fair value adjustments are not required unless observable price changes in orderly transactions for the identical or a similar investment become available.
Derivative Liability
The Company evaluates its debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB ASC. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the condensed consolidated statements of operations and comprehensive loss as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the date of conversion or exercise or cancellation and then the related fair value is reclassified to equity. Upon extinguishment or cancellation of a derivative instrument, any difference between the fair value and the settlement amount is recognized as a gain or loss under change in derivative liability on the condensed consolidated statements of operations and comprehensive loss.
In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.
The Company adopted Section 815-40-15 of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("Section 815-40-15") to determine whether an instrument (or an embedded feature) is indexed to the Company's own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions.
The Company utilizes a Monte Carlo simulation model for the make whole feature in the Company's outstanding Equity Line of Credit and for convertible notes that have an option to convert at a variable number of shares to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The inputs utilized in the application of the Monte Carlo model included a starting stock price, an expected term of each debenture remaining from the valuation date to maturity, an estimated volatility, drift, and a risk-free rate. The Company records the change in the fair value of the derivative as other income or expense in the condensed consolidated statements of operations and comprehensive loss.
As of September 30, 2026 and December 31, 2025, the Company had $10,667 and $1,668,038 of derivative liability on its condensed consolidated balance sheets, respectively. This was primarily attributable to the change in the fair value of the bifurcated conversion and make-whole features associated with the Company's convertible notes and warrants, as re-measured under the Monte Carlo simulation model at the September 30, 2026 balance sheet date, reflecting the shorter remaining term and updated market-based inputs. During the three and nine months ended September 30, 2026 and 2025, the Company recorded a change in the derivative valuation of $34,049 and $673,693, and $0 and $0, respectively.
Revenue Recognition
Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We determine revenue recognition through the following steps:
•identification of the contract, or contracts, with a customer;
•identification of the performance obligations in the contract;
•determination of the transaction price. The transaction price for any given subscriber could decrease based on any payments made to that subscriber. A subscriber may be eligible for payment through one or more of the monetization features offered to Vocal creators, including earnings through reads (on a cost per mile basis) and cash prizes offered to Challenge winners;
•allocation of the transaction price to the performance obligations in the contract; and
•recognition of revenue when, or as, we satisfy a performance obligation.
Deferred Revenue
Deferred revenue consists of billings and payments from clients in advance of revenue recognition. The Company has two types of deferred revenue, subscription revenue whereas the revenue is recognized over the subscription period and contract liabilities where the performance obligation was not satisfied. The Company will recognize the deferred revenue within the next twelve months.
As of September 30, 2026 and December 31, 2025, the Company had deferred revenue of $136,720 and $118,862, respectively. The increase of $17,858 reflects contract liabilities recorded under a statement of work for advisory services, partially offset by the recognition of previously deferred subscription revenue in excess of new subscription billings.
Stock-Based Compensation
The Company recognizes a compensation expense for all equity-based payments granted in accordance with Accounting Standards Codification 718 "Compensation - Stock Compensation". Under fair value recognition provisions, the Company recognizes equity-based compensation over the requisite service period of the award. The company has a relatively low forfeiture rate of stock-based compensation and forfeitures are recognized as they occur.
Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods.
The fair value of an option award is estimated on the date of grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the value of the underlying share, the expected stock volatility, the risk-free interest rate, the expected life of the option, the dividend yield on the underlying stock and forfeitures are recognized as they occur.. Expected volatility is derived from the Company's historical data over the expected option life and other appropriate factors. Risk-free interest rates are calculated based on continuously compounded risk-free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common stock and does not intend to pay dividends on its Common stock in the foreseeable future. Forfeitures are recognized as they occur.
Determining the appropriate fair value model and calculating the fair value of equity-based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity-based payment awards represent management's best estimates, which involve inherent uncertainties and the application of management's judgment. As a result, if factors change and the Company uses different assumptions, the Company's equity-based compensation could be materially different in the future. The Company issues awards of equity instruments, such as stock options and restricted stock units, to employees and certain non-employee directors. Compensation expense related to these awards is based on the fair value of the underlying stock on the award date and is amortized over the service period, defined as the vesting period. The vesting period is generally one to three years. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company's common stock at the date of grant is used for restricted stock units. Compensation expense is reduced for actual forfeitures as they occur.
During three and nine months ended September 30, 2026 and 2025, the Company had stock based compensation of $1,095,876 and $13,844,028, and, $770,812 and $4,080,995, respectively. The increase is primarily attributable to the
issuance of stock options to the Company's officers, directors, employees, and consultants during the period, substantially all of which vested upon grant and were therefore recognized in full at their grant-date fair value.
Recently Adopted Accounting Guidance
In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances income tax disclosure requirements by:
•Standardizing and disaggregating rate reconciliation categories.
•Requiring disclosure of income taxes paid by jurisdiction.
This ASU is effective for annual periods beginning after December 15, 2024, and may be applied on a prospective or retrospective basis. Early adoption is permitted.
The adoption of ASU 2023-09 did not have a material impact on the Company's condensed consolidated financial statements.
In November 2024, the FASB issued ASU 2024-04 - Debt-Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the accounting for inducements offered to holders of convertible debt. The amendments:
•Require application of the "pre-existing contract" approach when determining whether a transaction qualifies as an induced conversion.
•Clarify that induced conversion accounting may apply whether settlement is in cash or equity, provided the original conversion terms are preserved.
•Provide guidance for evaluating inducements when the underlying convertible debt was modified or exchanged within the prior 12 months.
This ASU is effective for annual periods beginning after December 15, 2025, and for interim periods within those annual periods. Early adoption is permitted.
The adoption of ASU 2024-04 did not have a material impact on the Company's condensed consolidated financial statements.
Recently Issued Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03 - Income Statement-Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses, which enhances expense disclosure requirements by:
•Requiring tabular disclosure of certain natural expense categories-such as employee compensation, depreciation, amortization, and inventory purchases-within relevant income statement line items.
•Requiring qualitative descriptions of any remaining expenses included within those line items that are not separately disclosed.
•Requiring annual disclosure of total selling expenses and the Company's definition of selling expenses, where applicable.
This ASU, as clarified by ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, is effective for annual periods beginning after December 15, 2026, and for interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted.
The Company is currently evaluating the impact of ASU 2024-03 on its expense disclosures and related reporting requirements.
In July 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract, which clarifies that share-based noncash consideration received from a customer is accounted for under Topic 606. This ASU is effective for annual periods beginning after December 15, 2026, and for interim periods within those annual periods. The Company is currently evaluating the impact of ASU 2025-07 on its condensed consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes the project stage model and requires capitalization of software costs once management has authorized and committed to funding the project and it is probable the project will be completed. This ASU is effective for annual periods beginning after December 15, 2027, and for interim periods within those annual periods. The Company is currently evaluating the impact of ASU 2025-06 on its condensed consolidated financial statements.
Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements.
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