NextTrip, Inc. New Standards Disclosure

Recently adopted accounting pronouncements

 

In July 2023, the FASB issued ASU 2023-03, Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718). The FASB Issued this ASU to amend and align various SEC paragraphs within the Codification with interpretive guidance recently issued by the Securities and Exchange Commission (SEC). Specifically, this update codifies the guidance from SEC Staff Accounting Bulletin (SAB) No. 120, which clarifies the application of ASC 718 – Compensation—Stock Compensation to certain share-based payment arrangements. SAB No. 120 was issued in response to concerns about so-called “spring-loaded” awards — share-based compensation arrangements granted shortly before the release of material nonpublic information (MNPI) that is expected to significantly affect the market price of the issuer’s stock. SAB No. 120 does not change the fundamental measurement principles of ASC 718, but it emphasizes the requirement to include the impact of MNPI in estimating fair value at the grant date when it is reasonable to expect that such information would be factored into the pricing by a market participant. Under ASC 718, entities must measure the grant-date fair value of equity-classified awards using an option-pricing model and inputs that reflect assumptions a market participant would make. SAB No. 120 reinforces that this includes: (i) adjusting expected volatility or stock price to reflect the anticipated impact of MNPI; (ii) documenting the rationale for assumptions that do not reflect such information, if applicable; and (iii) ensuring internal control processes capture relevant information in determining grant-date fair value. The Company adopted ASU 2023-03 effective January 1, 2024. In conjunction with this adoption, the Company reviewed its stock compensation grant practices and valuation procedures under ASC 718. While the Company has not historically granted awards in close proximity to the release of MNPI, it has updated its internal controls to require additional documentation and review for any future awards that may be subject to this scenario. The adoption of ASU 2023-03 did not result in any changes to the recognition or measurement of share-based payment expense in the Company’s consolidated financial statements. However, the Company enhanced its internal controls around the timing and valuation of equity awards to ensure compliance with the interpretive guidance of SAB No. 120 and ASC 718.

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve disclosures about a public entity’s reportable segments and address investor feedback for greater transparency. The Company adopted ASU 2023-07 for its fiscal year beginning March 1, 2025 (i.e., for the fiscal year ending February 28, 2026). The amendments require entities to disclose, on an annual and interim basis: (i) significant segment expense categories that are regularly provided to the chief operating decision maker (“CODM”); (ii) an explanation of how reported segment profit or loss is measured; (iii) the title and position of the CODM and a description of how the CODM uses the reported measures of segment profit or loss in assessing performance and allocating resources; and (iv) expanded segment disclosures in interim periods, consistent with annual disclosures. The annual disclosure provisions are reflected in Note 24 — Segment Information. The interim disclosure provisions will be reflected beginning with the Company’s Quarterly Report on Form 10-Q for the quarterly period ending May 31, 2026.

 

In response to recent acquisitions and expanded business activities, during the third quarter of Fiscal 2026, our Chief Operating Decision Maker (“CODM”), who is our Chief Executive Officer, requested changes in the information that he regularly reviews for purposes of allocating resources and assessing performance. As a result, we have updated our reporting and beginning in the third quarter of fiscal year 2026, we report our financial performance based on our new segments, “Travel” and “Media”. A detailed description of our operating segments as of February 28, 2026 can be found in NOTE 24 to the Financial Statements and the Overview section of Item 2 of this Annual Report, entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Prior periods have been recast to conform to these newly identified segments.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require enhanced annual disclosures of (i) the effective tax rate reconciliation, using both prescribed categories and quantitative disclosure of individual reconciling items that meet specified thresholds, and (ii) income taxes paid (net of refunds), disaggregated by federal, state, and foreign jurisdictions, with further disaggregation by individual jurisdiction where payments equal or exceed 5% of total income taxes paid. The Company adopted ASU 2023-09 on a prospective basis for its fiscal year beginning March 1, 2025 (i.e., for the fiscal year ending February 28, 2026). Adoption resulted in expanded income tax footnote disclosures (see Note 14 — Income Taxes) but did not impact the Company’s consolidated financial position, results of operations, or cash flows.

 

In March 2024, the FASB issued ASU 2024-02, Codification Improvements — Amendments to Remove References to the Concepts Statements. The Company adopted ASU 2024-02 for its fiscal year beginning March 1, 2025 and the adoption did not have a material impact on the Company’s consolidated financial statements.