What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-04-19 compared with 2022-04-06 · 173 added, 238 removed, 202 unchanged (67% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should

46 unchanged sentences

The creator economy is well-established and thriving, consisting of

over 50 million content creators and a valuation of over $100 billion, and growing.

Creatd plays a crucial role within this ecosystem,

with a range of businesses established to help creators realize their potential both creatively and monetarily, partnering with peers

in their community and brands when the opportunity arises.

Specifically, our role within the creator

economy and ecosystem is to provide creators with economic opportunities.

We accomplish this through four main business pillars:

Creatd Labs, Creatd Partners, Creatd Ventures, and Creatd Studios.

Together, Creatd's pillars work together to create multiple

flywheel effects and growth drivers, supporting our core vision of creating a viable ecosystem for all stakeholders in the creator

2021 was a positioning year for Creatd, during which the Company established a solid business foundation, fortified its

infrastructure, rationalized costs to accelerate cashflow breakeven, and effectively eliminated impediments to rapid growth which we

believe will continue to drive revenues.

hundreds of millions of creators and billions of viewers.

Creatd plays a crucial role within this ecosystem, with a range of businesses

established to help creators realize their potential both creatively and monetarily, partnering with peers in their community and brands

when the opportunity arises.

At the center of our businesses lies Vocal, our core technology platform that hosts our creator community

and generates the first-party data that powers our revenue generation.

Results of Operations

7 unchanged sentences

$ (13,728,152 )

At December 31, 2021, we had a working capital

(deficit) of $(945,773) as compared to a working capital of $3,052,566 at December 31, 2020, a decrease in working capital of $3,998,339.

The decrease is primarily attributable to a reduction in cash and an increase in deferred revenue, accounts payable, and accrued liabilities.

This was offset by an increase in prepaid expense, accounts receivable, and a decrease in debt obligations.

Net cash used in operating activities for the

year ended December 31, 2021, and 2020, was $20,518,807 and $7,340,487, respectively.

The net loss for the year ended December 31, 2021,

$ (12,782,379 )

At December 31, 2022, the Company had a working

capital deficit of $13,728,152 as compared to a working capital deficit of $945,773 at December 31, 2021, an increase in working capital

deficit of $12,782,379.

The increase is primarily attributable to the decrease in cash, and prepaids and other current assets, as well

as an increase in accounts payable, notes payable and deferred revenue.

This was offset by an increase in accounts receivable and inventory.

Net cash used in operating activities for the year ended December 31,

2022, and 2021, was $16,805,429 and $20,518,807, respectively.

This change is primarily attributable to the net loss for the current period offset

by share-based payments in the amount of $9,661,174 to employees and consultants for services rendered, accretion of debt discount and

debt issuance costs of $3,612,669 due to incentives given with debentures, and a change in fair value of derivative liability of $1,096,287,

as well as a change in accounts payable and accrued expenses of $1,714,902.

The increased net cash used in 2021 reflected

an extraordinary cash outlay for marketing, which went toward generating a lower creator acquisition cost for paid Vocal subscribers,

and an increase in general and administrative expenses.

Net cash used in investing activities for the

year ended December 31, 2021, was $1,168,123.

This is primarily attributable to the purchase of Plant Camp, WHE Agency, Dune Inc., property

and equipment, and cash paid for the purchase of investments.

Net cash provided by financing activities

for the year ended December 31, 2021, and 2020 was $17,615,915 and $15,814,083, respectively.

During the year ended December 31, 2021,

the Company’s operations were predominantly financed by net proceeds of $9,487,223 from the exercise of warrants, the proceeds from

sale of common stock and warrants of $5,666,951, the proceeds from loans and notes of $4,358,428, and proceeds from the issuance of stock

and warrants, which were partially offset by the repayment of notes and loans of $1,398,113.

Similarly, the Company’s financing

activity for the year ended December 31, 2020, generated $5,745,485 from loans and note issuances, the proceeds of which were partially

offset by repayment of notes of $3,224,418.

The net loss for the year ended December 31, 2022, and 2021 was $35,676,315

and $37,379,153, respectively.

This change is primarily attributable to the net loss for the current period offset by share-based payments

in the amount of $4,183,844 to employees and consultants for services rendered, accretion of debt discount and debt issuance costs of

$4,668,039, due to incentives given with debentures, and a change in accounts payable and accrued expenses of $4,773,551.

The decreased net cash used in 2022 reflected

an extraordinary cash outlay for marketing in 2021 that went toward generating a lower creator acquisition cost for paid Vocal subscribers

and was not repeated in 2022, as well as a decrease in payroll expenses from 2021 to 2022.

Net cash provided by investing activities for

the year ended December 31, 2022, was $373,206.

This is primarily attributable to the sale of minority interest in OG Collection, Inc.

This was offset by the sale and purchase of digital assets.

Net cash provided by financing activities for

the year ended December 31, 2022, and 2021 was $13,405,624 and $17,615,915, respectively.

During the year ended December 31, 2022, the

Company’s operations were predominantly financed by net proceeds of $1,781,947 from the exercise of warrants, the proceeds from

sale of common stock and warrants of $5,722,300, and the proceeds from loans and notes of $10,611,124, which were partially offset by

the repayment of notes and loans of $4,693,967.

Similarly, the Company’s financing activity for the year ended December 31, 2021,

generated $4,358,428 from loans and note issuances, the proceeds of which were partially offset by repayment of notes of $1,398,113.

Summary of Statements of Operations for the

10 unchanged sentences

$ (37,379,153 )

$ (24,212,783 )

Loss per common share - basic and diluted

Revenue was $4,796,474 for the year ended December

31, 2021, as compared to $1,212,870 for the comparable year ended December 31, 2020, an increase of $3,086,847.

The year-over-year increase

in revenue is primarily attributable to year-over-year growth in Vocal+ memberships as well as consistent growth in the Company’s

agency businesses, which was further accelerated by the immediate and growing impact of the acquisition of the WHE Agency, which was successfully

integrated during third quarter into Creatd Partners’ growing business lines, as well as the start of material contributions

from Creatd Ventures following the launches of Camp and Dune.

31, 2022, as compared to $4,299,717 for the year ended December 31, 2021.

The increase of $496,757 was attributable to our ecommerce business,

which grew from $90,433 in revenue in 2021 to $1,456,593 in 2022.

This growth in ecommerce revenues was partially offset by a decrease

in agency revenues in a slowing market for influencer-based sales.

Vocal revenues were stable though down year over year as the company

transitioned from a pay-to-play marketing model to an organic growth framework.

Cost of Revenue

Cost of revenue for the year ended December 31,

2021, were $5,300,037 as compared to $1,495,042 for the year ended December 31, 2020.

The increase of $3,804,995 in cost of revenue is

mainly related to an increase personnel costs and creator costs around the moderation and content development associated with increasing

Vocal+ memberships, as well as the acquisition of WHE, the growth of which requires additional sales and talent management personnel to

Cost of revenue for the year ended December 31, 2022, was $6,109,206

as compared to $5,300,037 for the year ended December 31, 2021, an increase of $809,169 attributable to increased supply side costs in

our direct-to-consumer product business, a portion of which were due to our increased revenue in our direct-to-consumer businesses.

Operating Expenses

1 unchanged sentence

31, 2022, were $27,718,380 as compared to $32,368,400 for the year ended December 31, 2021.

The increase of $16,367,237 in operating expenses

is mainly related to a $6.8 million increase in marketing expenditure, a $1.0 million increase from the impairment of goodwill, a $5.0

million increase in general and administrative expenses resulting from a near-doubling in headcount and related personnel expenses, and

a $2.8 million increase in non-cash charges relating to the issuance of equity to management and employees.

Much of the increase in marketing

expenditure occurred during the company’s second quarter 2021 as it focused significant resources on tactical experimentation utilizing

our internal data to generate a lower creator acquisition cost, resulting in significant Vocal+ membership growth, with the Company ending

the second quarter 2021 having achieved a new milestone of over 30,000 Vocal+ members.

The Company went on to significantly reduce marketing

spend in third quarter, 2021 and then further reduce marketing for fourth quarter 2021 and expects future quarterly spend to reflect levels

consistent with fourth quarter going forward.

During 2021, the company’s non-cash charges totaled $9.7 million, representing past

performance-based stock option grants to senior management and board members, which vest over multiple years, year-end employee performance

based-stock grants, as well as extraordinary and non-recurring cash charges totaling approximately $2.5 million related to the acquisition

audit mainly from WHE, legal expenses, consulting, banking and recruiting fees.

The decrease of $4,650,020 is primarily attributable

to a significant reduction in overhead, including an almost $5 million reduction in marketing spend and reductions in research and development.

In addition, there was a reduction in stock-based compensation from $9.7 million in 2021 to $4.2 million in 2022.

These decreases were

partially offset by an increase in impairment of intangible assets, legal and consulting fees, as well as office rent.

Loss from Operations

1 unchanged sentence

31, 2022, was $29,031,112 as compared to $33,368,720 for the year ended December 31, 2021.

The operating loss increase primarily reflects

added marketing expenses during the first half of 2021 as the company launched a comprehensive marketing campaign to support Vocal+ membership

Additionally, the Company nearly doubled its headcount during the year to support growth in numerous of its business lines, including

the launch of two Creatd Ventures e-commerce brands.

During this transition period, the Company experienced the need for duplicate expenditures

to maintain operations while training its new hires, though their addition will ultimately reduce the need for outsourced third-party

service providers.

Going forward, the Company expects the loss from operations to decrease as revenues continue to increase and expenses

remain relatively constant.

Other Income and Expenses

Other Expenses

Other expenses for the year ended December 31,

2022, were $6,645,203 as compared to $4,010,433 for the year ended December 31, 2021.

The decrease in other expenses was predominantly

due to the change in gain vs.

loss of extinguishment of debt and a reduction in interest expense.

This was offset by an increase in derivative

expense, change in fair value of derivative liability, and the impairment of investments.

The increase in other expenses was predominantly

due to an increase in accretion of debt discount and issuance cost, interest expense, loss of extinguishment of debt, and loss from settlement

of vendor liabilities.

This was offset by the decrease from the impairment of investment and change in derivative liability.

Net loss attributable to common shareholders for

31 unchanged sentences

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 our own assumptions in determining the fair value of investments)

● 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 our own assumptions in determining the fair value of investments)

The Company’s Level 1 assets/liabilities

include cash, accounts receivable, marketable trading securities, 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 December 31, 2021 approximate their carrying

value as reflected in the balance sheets due to the short-term nature of these instruments or the use of market interest rates for debt

include cash, accounts receivable, marketable trading securities, accounts payable, prepaid and other current assets, and due to related

Management believes the estimated fair value of these accounts at December 31, 2022 approximate their carrying value as reflected

in the 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 2 assets/liabilities

5 unchanged sentences

include goodwill, intangible assets, marketable debt securities, equity investments at cost, and derivative liabilities.

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.

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 using model-based techniques, including option pricing

1 unchanged sentence

Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.

Long-lived Assets Including Goodwill and

Other Acquired Intangible Assets

Long-lived Assets Including Acquired Intangible

We evaluate the recoverability of property and

equipment and acquired finite-lived intangible 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.

If such review

indicates that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets

is reduced to fair value.

During the year ended December 31, 2021 the Company recorded an impairment charge of $688,127 for intangible

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.

Digital assets accounted for as intangible assets are subject to impairment losses if the fair value of

digital assets decreases other than temporarily below the carrying value.

The fair value is measured using the quoted price of the crypto

asset at the time its fair value is being measured.

If such review indicates that the carrying amount of property and equipment and intangible

assets is not recoverable, the carrying amount of such assets is reduced to fair value.

During the year ended December 31, 2022, the Company

recorded an impairment charge of $2,043,011 for intangible assets.

During the year ended December 31, 2021, the Company recorded an impairment

charge of $688,127 for intangible assets.

Acquired finite-lived intangible assets are amortized

4 unchanged sentences

balance is amortized or depreciated over the revised estimated useful life.

During the year ended December 31, 2021, the Company

completed its annual impairment test of goodwill.

The Company performed the qualitative assessment as permitted by ASC 350-20 and determined

that the fair value of the Seller's Choice reporting unit was more likely than not less than the carrying value, including Goodwill.

on completion of this annual impairment test, the Company recorded an impairment charge of $ 1,035,795 for goodwill.

Marketable securities that are bought and held

principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value, with

unrealized gains and losses recognized in earnings.

Debt securities not classified as held-to-maturity or as trading are classified as

available-for-sale, and are carried at fair market value, with the unrealized gains and losses, net of tax, included in the determination

of comprehensive income and reported in stockholders’ equity.

The Company accounts for its investments in available-for-sale

debt securities, in accordance with sub-topic 320-10 of the FASB ASC (“Sub-Topic 320-10”).

Accrued interest on these securities

is included in fair value and amortized cost.

Pursuant to Paragraph 320-10-35, investments in

debt securities that are classified as available for sale shall be measured subsequently at fair value in the statement of financial position.

Unrealized holding gains and losses for available-for-sale securities (including those classified as current assets) shall be excluded

from earnings and reported in other comprehensive income until realized.

The Company follows FASB ASC 320-10-35 to assess

whether an investment in debt securities is impaired in each reporting period.

An investment in debt securities is impaired if the fair

value of the investment is less than its amortized cost.

If the Company intends to sell the debt security (that is, it has decided to

sell the security), an other-than-temporary impairment shall be considered to have occurred.

If the Company more likely than not will

be required to sell the security before recovery of its amortized cost basis or it otherwise does not expect to recover the entire amortized

cost basis of the security, an other-than-temporary impairment shall be considered to have occurred.

The Company considers the expected

cash flows from the investment based on reasonable and supportable forecasts as well as several other factors to estimate whether a credit

If the Company intends to sell the security or more likely than not will be required to sell the security before recovery

of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment shall be recognized in earnings equal

to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date.

year ended December 31, 2021, the Company recorded an impairment charge of $102,096 for investments.

Equity Method Investments

Investments in unconsolidated entities over which

we have significant influence are accounted for under the equity method of accounting.

Under the equity method of accounting, the Company

does not consolidate the investment’s financial statements within its consolidated financial statements.

Equity method investments

are initially recorded at cost, then our proportional share of the underlying net income or loss is recorded as equity in net loss from

equity method investments in our statement of operations, with a corresponding increase or decrease to the carrying value of the investment.

Distributions received from the investee reduce our carrying value of the investment and are recorded in the consolidated statements of

cash flows using the cumulative earnings approach.

These investments are evaluated for impairment if events or circumstances arise that

indicate that the carrying amount of such assets may not be recoverable.

There were indicators of impairment related to our equity method

investments for the year ended December 31, 2021.

During the year ended December 31, 2021, the Company recorded an impairment charge

of $487,365 for investments.

The remaining weighted average life of the intangible assets

is 8.06 years.

Goodwill is not amortized but is subject to periodic

testing for impairment in accordance with ASC Topic 350 “Intangibles – Goodwill and Other – Testing Indefinite-Lived

Intangible Assets for Impairment” (“ASC Topic 350”).

The Company tests goodwill for impairment on an annual basis as

of the last day of the Company’s fiscal December each year or more frequently if events occur or circumstances change indicating

that the fair value of the goodwill may be below its carrying amount.

The Company uses an income-based approach to determine the fair

value of the reporting units.

This approach uses a discounted cash flow methodology and the ability of our reporting units to generate

cash flows as measures of fair value of our reporting units.

During the year ended December 31, 2022 and 2021,

the Company completed its annual impairment tests of goodwill.

The Company performed the qualitative assessment as permitted by ASC 350-20

and determined for one of its reporting units that the fair value of that reporting unit was more likely than not greater than its carrying

value, including Goodwill.

However, based on this qualitative assessment, the Company determined that the carrying value of the Denver

Bodega, Dune, Plant Camp and, WHE Agency reporting units was more likely than not greater than their carrying value, including Goodwill.

Based on the completion of the annual impairment tests, the Company recorded an impairment charge of $1,433,815 and $1,035,795 for

goodwill for the years ended December 31 2022 and 2021, respectively.

Derivative Liability

20 unchanged sentences

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.

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

13 unchanged sentences

We determine revenue recognition through the following

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 mille basis) and cash prizes

offered to Challenge winners;

allocation of the transaction price to the performance obligations in the contract;

recognition of revenue when, or as, we satisfy a performance obligation.

● identification of the contract,

or contracts, with a customer;

● identification of the performance

obligations in the contract;

● determination of the transaction

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 mille basis) and cash prizes offered to Challenge winners;

● allocation of the transaction

price to the performance obligations in the contract;

● recognition of revenue when,

or as, we satisfy a performance obligation.

Deferred Revenue

1 unchanged sentence

from clients in advance of revenue recognition.

As of December 31, 2021, and December 31, 2020, the Company had deferred revenue

of $234,159 and $88,637, respectively.

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 December 31, 2022 and 2021, the Company had deferred revenue of $299,409

and $234,159 respectively.

Stock-Based Compensation

The Company recognizes compensation expense for

all equity–based payments granted in accordance with Accounting Standards Codification (“ASC”) 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.

The Company recognizes compensation expense for all

equity-based payments granted in accordance with Accounting Standards Codification (“ASC”) 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

3 unchanged sentences

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 the expected

forfeiture rate.

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

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.

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.

1 unchanged sentence

calculating the fair value of equity-based payment awards requires the input of the subjective assumptions described above.

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, our 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.

Recently Adopted Accounting Guidance

In December 2019, the FASB issued authoritative

guidance intended to simplify the accounting for income taxes (ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting

for Income Taxes”).

This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds

new guidance to reduce the complexity in accounting for income taxes.

This guidance is effective for annual periods after December 15,

2020, including interim periods within those annual periods.

The updated guidance, which became effective for fiscal years beginning after

December 15, 2020, did not have a material impact on the Company’s consolidated financial statements.

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,

our 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.

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.

Recent Accounting Guidance Not Yet Adopted

3 unchanged sentences

The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets.

ASU 2016-13 is

effective for the fiscal year beginning after December 15, 2022, including interim periods within that fiscal year.

The Company is currently

evaluating the impact of the new guidance on its consolidated financial statements.

On October 16,

2019, FASB approved a final ASU delaying the effective date of ASU 2016-13 for small reporting companies to interim and annual periods

beginning after December 15, 2022.

The Company is currently evaluating the impact of these amendments to the Company’s financial

position and results of operations and currently does not know or cannot reasonably quantify the impact of the adoption of the amendments

as a result of the complexity and extensive changes from the amendments.

The adoption of the guidance will affect disclosures and estimates

around accounts receivable.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt

4 unchanged sentences

EPS guidance for both Subtopics.

The ASU will be effective for annual reporting periods after December 15, 2021, and interim periods within

those annual periods and early adoption is permitted.

The Company is currently evaluating the impact of the new guidance on its condensed

consolidated financial statements.

In May 2021, the FASB issued authoritative guidance

intended to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified

written call options that remain equity classified after modification or exchange.

(ASU 2021-04), “Derivatives and Hedging Contracts

in Entity’s Own Equity (Topic 815).

This guidance amendments provide measurement, recognition, and disclosure guidance for an issuer’s

accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification

This guidance is effective for annual periods after December 15, 2021, including interim periods within those annual periods.

The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements.

In July 2021, the FASB issued ASU No.

Lessors—Certain Leases with Variable Lease Payments (Topic 842), Which requires a lessor to classify a lease with variable lease

payments that do not depend on an index or rate (hereafter referred to as “variable payments”) as an operating lease on the

commencement date of the lease if specified criteria are met.

ASU 2021-05 is effective for the fiscal year beginning after December 15,

2022, including interim periods within that fiscal year.

The Company expects that there would be no material impact on the Company’s

condensed consolidated financial statements upon the adoption of this ASU.

ASU 2020-06 is effective for the fiscal year beginning after December 15, 2022, including interim periods

within that fiscal year.

Upon adoption, the Company would no longer recognize the intrinsic value of beneficial conversion features underlying

convertible debt.

During the year ended December 31, 2022, the company recognized approximately $2.0 million relating to a beneficial

conversion feature.

In October 2021, the FASB issued ASU No.

5 unchanged sentences

The Company expects that there would be no material impact on the Company’s

condensed consolidated financial statements upon the adoption of this ASU.

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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

consolidated financial statements upon the adoption of this ASU.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis