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 (3) 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 to improve disclosures about a public entity’s reportable segments and address investor feedback for greater transparency. The amendments are intended to enhance the usefulness of segment information, particularly regarding expenses, by requiring more detailed disclosures and expanding the scope of interim disclosures. The Company adopted ASU 2023-07 for its fiscal year beginning March 1, 2024 (i.e., for the fiscal year ending February 28, 2025), as required. The amendments require entities to disclose, on an annual and interim basis: (i) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”); (ii) an explanation of how reported segment profit or loss is measured, (ii) The title and position of the CODM; (iii) a description of how the CODM uses reported measures in decision-making; and (iv) expanded disclosures of segment information in interim periods, consistent with annual disclosures.

 

We manage the Company as one reportable segment, Travel Products and Services. Travel bookings are the source of our revenues and include the sale of travel products such as airline tickets and hotel rooms as well as travel services such as travel insurance and ground activities. The segment information aligns with how the Company’s CODM reviews and manages our business. The Company’s CODM is the Company’s Chief Executive Officer.

 

Financial information and annual operating plans and forecasts are prepared and are reviewed by the CODM at a consolidated level. The CODM assesses performance for the Travel Products and Services segment and decides how to allocate resources based on revenue and net income that is reported on the Consolidated Statements of Operations. The Company’s objective in making resource allocation decisions is to optimize the financial results. The accounting policies of our Travel Products and Services segment are the same as those described in the summary of significant accounting policies herein.

 

For our single reportable segment-level financial information, total assets, and significant non-cash transactions, see the Financial Statements.