Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References herein to "we," "us," "our," "FCR," and the "Company" refer to Fortress Credit Realty Income Trust, together with its consolidated subsidiaries, unless the context specifically requires otherwise.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in Part I. Item 1A - "Risk Factors" in our Annual Report.

Overview

Fortress Credit Realty Income Trust is a credit-focused diversified mortgage REIT, which invests in the senior parts of the capital structure, with a focus on (i) floating rate loans across commercial real estate ("CRE") debt ("CRE Debt") and (ii) investments in real estate-related assets. We are externally managed by FCR Advisors LLC, our Adviser and an affiliate of Fortress.

The Company is a Maryland statutory trust formed on June 4, 2024 ("Date of Formation"); however, no activity occurred until August 2, 2024. The Company is a non-listed, perpetual life REIT that qualifies to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code") for U.S. federal income tax purposes. The Company generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to shareholders and maintain our qualification as a REIT.

As of June 30, 2025, we have received aggregate proceeds of $1.0 billion from the sale of our common shares. The Company has primarily used the net proceeds to make investments in real estate debt and other investments as further described below under "Overall Portfolio." The Company intends to continue selling common shares on a monthly basis.

Market Conditions and Trends

The Company's businesses are materially affected by conditions in the financial markets and economic conditions in the United States and, to a lesser extent, elsewhere in the world.

During the second quarter of 2025, the persistence of both elevated inflation and interest rates, in conjunction with tariff risks, political uncertainty, geopolitical uncertainty (including the conflict between Russia and Ukraine, or the ongoing and developing conflicts in the Middle East, and other developing conflicts), and uncertainty around future capital availability continued to weigh on industry deal activity and market valuations.

However, industry transaction volumes increased slightly compared to the previous quarter and are expected to continue to grow. Our business, focused on floating rate loans across CRE debt and residential loans and assets, continued to deploy significant capital across senior components of the capital structure. Our investors continue to benefit from the inflation-mitigating characteristics and long term risk adjusted returns of our credit-focused diversified mortgage REIT strategy.

We are continuing to closely monitor developments related to the macroeconomic factors that have contributed to market volatility, and to assess the impact of these factors on financial markets and on our business. Our future results may be adversely affected by slowdowns in fundraising activity and the pace of capital deployment. It remains difficult to predict the ultimate effects of these events on the financial markets, overall economy, and our financial statements. See "Item 1A. Risk Factors-Risks Related to Our Business and Operations" in our Annual Report.

Recent Developments

Since June 30, 2025, and through and including the date hereof, we have (i) originated six CRE loans across the United States with an aggregate loan amount and outstanding principal amount of $155.9 million and $140.7 million, respectively, (ii) funded an additional $1.3 million towards the outstanding principal balance of existing residential bridge loans, (iii) entered into that certain MS Repurchase Facility, as described below and (iv) issued and sold an aggregate of 4,146,869 common shares in our private offering, resulting in proceeds of $83.9 million (see "Item 1. Financial Statements-Notes to Condensed

Consolidated Financial Statements-Note 12. Subsequent Events" and the section titled "Item 2. Unregistered Sales of Equity Securities and Use of Proceeds").

MS Repurchase Facility

On July 24, 2025, a subsidiary of the Company, FCR MS Seller LLC, as seller (the "MS Seller"), Morgan Stanley Mortgage Capital Holdings LLC, as administrative agent ("Administrative Agent") for Morgan Stanley Bank, N.A. and such other financial institutions from time to time party thereto as buyers ("MSBNA" and, together with such other financial institutions from time to time party hereto, the "Buyers") entered into a Master Repurchase and Securities Contract Agreement (together with the related transaction documents, the "MS Seller Repurchase Agreement"). The MS Seller Repurchase Agreement provides financing of up to an aggregate of $250 million in connection with the acquisition and/or origination by the Company of certain loans as more particularly described in the MS Seller Repurchase Agreement. Subject to the terms and conditions thereof, the MS Seller Repurchase Agreement provides for the purchase, sale and repurchase of mortgage loans, mezzanine loans and participation interests in such mortgage loans satisfying certain conditions set forth in the MS Seller Repurchase Agreement (collectively, the "MS Repurchase Facility").

Advances under the MS Seller Repurchase Agreement accrue interest at a per annum rate equal to Term SOFR for a one-month period plus a margin as agreed upon by MSBNA and the MS Seller for each transaction. The termination date of the MS Seller Repurchase Agreement is July 24, 2029, as such date may be extended with availability for new transactions pursuant to a one-year extension option, subject to satisfaction of certain customary conditions in accordance with the MS Seller Repurchase Agreement.

In connection with the MS Seller Repurchase Agreement, the Company entered into a Guaranty and Indemnity agreement, dated July 24, 2025 (the "MS Guaranty"), under which the Company guarantees (the "Guaranty") the obligations of the MS Seller under the MS Repurchase Agreement, provided, however, that the maximum liability of the Company pursuant to the MS Guaranty shall not exceed 25% of the then-outstanding principal amount of the MS Repurchase Facility. Notwithstanding the foregoing, such limitation on the Company's Guaranty may be nullified in certain circumstances, including if the MS Seller or the Company become the subject of a voluntary or collusive involuntary proceeding under any bankruptcy, insolvency or similar law and for other customary insolvency related actions. The Company is also liable under the MS Guaranty for costs, expenses, damages and losses actually incurred by the Buyers or the Administrative Agent resulting from customary "bad boy" events pertaining to the Company and/or the MS Seller as described in the MS Guaranty.

The MS Seller Repurchase Agreement and the MS Guaranty contain various restrictions and covenants that are customary for similar agreements, including financial covenants relating to the Company's minimum net worth, liquidity and maximum leverage.

Emerging Growth Company Status

We are and will remain an "emerging growth company" as defined in the JOBS Act until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the date of an initial public offering pursuant to an effective registration statement under the Securities Act, (ii) in which we have total annual gross revenue of at least $1.235 billion, or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our shares that is held by non-affiliates exceeds $700 million as of the date of our most recently completed second fiscal quarter, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. For so long as we remain an "emerging growth company" we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We cannot predict if investors will find our shares less attractive because we may rely on some or all of these exemptions.

In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We will take advantage of the extended transition period for complying with new or revised accounting standards, which may make it more difficult for investors and securities analysts to evaluate us since our financial statements may not be comparable to companies that comply with public company effective dates. Also, because we are not a large accelerated filer or an accelerated filer under Section 12b-2 of the Exchange Act, and will not be for so long as our common shares are not traded on a securities exchange, we will not be subject to auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act even once we are no longer an emerging growth company.

Q2 2025 Highlights

Operating Results

We declared monthly net distributions totaling $17.2 million for the three months ended June 30, 2025. The details of our total returns are shown in the following table:

Investment Activity

For the three months ended June 30, 2025, we originated the below senior secured CRE loans ($ in thousands):

On August 2, 2024, we entered into a subscription agreement for an equity investment in a conventional mortgage servicing rights portfolio ("MSR"). We have agreed to an aggregate capital commitment of $150.0 million and have funded $81.9 million as of June 30, 2025. The interest in the MSR portfolio is associated with $6.0 billion of unpaid principal balance on residential mortgage loans. The subscription agreement was executed in connection with a joint venture agreement with a

third party. Pursuant to the joint venture operating agreement, most major decisions related to the joint venture, including acquisitions thereof, and its assets require the consent of the Company. The Company retains the unilateral right to cause the joint venture to take certain actions, including as to matters related to litigation, servicing and disposition of assets.

On December 20, 2024, we entered into a forward flow relationship with a non-bank lender to purchase newly originated bridge loans secured by mortgages on residential properties. As of June 30, 2025, our residential bridge loans consisted of the following ($ in thousands):

(1) Loan amount consists of outstanding principal balance plus unfunded loan commitments.

(2)Maximum maturity date assumes all extension options are exercised.

As of June 30, 2025, we have acquired the below tax lien investments ($ in thousands):

Capital Activity and Financings

During the three months ended June 30, 2025, we repaid $4.0 million outstanding principal balance on the borrowings governed by that certain Loan and Security Agreement, dated as of November 8, 2024, by and among FCR TL Holdings LLC, an indirect, wholly-owned subsidiary of the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent and lenders from time to time party thereto (the "Revolving Credit Facility") and drew an additional $219.9 million. We drew an additional $269.5 million on our Repurchase Facilities during the three months ended June 30, 2025.

Atlas Repurchase Facility

On October 11, 2024, a subsidiary of the Company, FCR DC JV Atlas Seller I LLC, as seller (the "Atlas Seller"), and Atlas Securitized Product Investments 2, L.P., as administrative agent and buyer ("Atlas"), entered into a Master Repurchase Agreement (together with the related transaction documents, the "Atlas Repurchase Agreement" and, the repurchase facility governed by the Atlas Repurchase Agreement, the "Atlas Repurchase Facility"). The Company provided a guaranty in connection with the Atlas Repurchase Agreement (the "Atlas Guaranty").

On April 23, 2025, the Atlas Seller and Atlas, as administrative agent and buyer, entered into an amendment to the Atlas Repurchase Agreement (together with the related transaction documents, the "Amended Atlas Repurchase Agreement"). Pursuant to the Amended Atlas Repurchase Agreement, the financing available in connection with the acquisition and origination by the Company of certain loans, as more particularly described in the Amended Atlas Repurchase Agreement, was increased from an aggregate of $200 million to $300 million.

In connection with the Amended Atlas Repurchase Agreement, on April 23, 2025, the Company entered into a first amendment to the Atlas Guaranty, dated October 11, 2024 (the "Amended Atlas Guaranty"). Pursuant to the Amended Atlas Guaranty, the Company agreed to satisfy certain minimum adjusted net worth standards and certain liquidity requirements.

Revolving Credit Facility

On November 8, 2024, FCR TL Holdings LLC, an indirect, wholly-owned subsidiary of the Company (the "FCR TL Holdings"), as borrower, entered into a Loan and Security Agreement (the "Subsidiary Loan Agreement" and the revolving credit facility governed by the Subsidiary Loan Agreement, the "Revolving Credit Facility") with JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the "Administrative Agent").

On May 1, 2025, FCR TL Holdings, JPMorgan, as administrative agent and lender, and the Company entered into Amendment No. 1 to the Revolving Credit Facility ("Revolving Credit Facility Amendment"). Pursuant to the Revolving Credit Facility Amendment, the limitation on the maximum amount borrowable under the Revolving Credit Facility was amended to remove limitations based on the borrowings of other Fortress funds on facilities between such entities and JPMorgan. The maximum loan amount under the Revolving Credit Facility remains at $300 million, subject to the termination and condition set forth in the Revolving Credit Facility.

GS Repurchase Facilities

On August 16, 2024, a subsidiary of the Company, FCR GS Seller I LLC, as seller (the "GS Seller I"), and Goldman Sachs Bank USA, as purchaser ("Goldman Sachs"), entered into a Master Repurchase Agreement (together with the related transaction documents, the "GS Seller I Repurchase Agreement"). On October 11, 2024, a subsidiary of the Company, FCR DC GS Seller III LLC, as seller (the "GS Seller III"), and Goldman Sachs, as purchaser, entered into a Master Repurchase Agreement (together with the related transaction documents, the "GS Seller III Repurchase Agreement"). On December 18, 2024, a subsidiary of the Company, FCR Key GS Seller II LLC, as seller (the "GS Seller II" and, together with the GS Seller I and GS Seller III, the "GS Sellers"), and Goldman Sachs, as purchaser, entered into a Master Repurchase Agreement (together with the related transaction documents, the "GS Seller II Repurchase Agreement" and, together with the GS Seller I Repurchase Agreement and GS Seller III Repurchase Agreement, the "GS Repurchase Agreements" and, the repurchase facilities governed by the GS Repurchase Agreements, the "GS Repurchase Facilities" and, together with the Atlas Repurchase Facility, the "Repurchase Facilities").

The Company provided guaranties in connection with the GS Repurchase Agreements (the "GS Guaranty I", the "GS Guaranty II" and the "GS Guaranty III," respectively, and collectively, the "GS Guaranties").

On May 6, 2025, (i) the GS Seller I and Goldman Sachs, as purchaser, entered into a second amendment to the "GS Seller I Repurchase Agreement, as previously amended as of December 18, 2024 (together with the related transaction documents, the "Second Amended GS Seller I Repurchase Agreement"), (ii) the GS Seller III and Goldman Sachs, as purchaser, entered into a second amendment to the GS Seller III Repurchase Agreement, as previously amended as of December 18, 2024 (together with the related transaction documents, the "Second Amended GS Seller III Repurchase Agreement") and (iii) the GS Seller II and Goldman Sachs, as purchaser entered into an amendment to the GS Seller II Repurchase Agreement (together with the related transaction documents, the "Amended GS Seller II Repurchase Agreement" and, together with the Second Amended GS Seller I Repurchase Agreement and Second Amended GS Seller III Repurchase Agreement, the "Amended GS Repurchase Agreements"). Pursuant to the Amended GS Repurchase Agreements, the financing available in connection with the acquisition and/or origination by the Company of certain loans, as more particularly described in the Amended GS Repurchase Agreements, was increased from an aggregate of $500 million to $750 million.

In connection with the Amended GS Repurchase Agreements, on May 6, 2025, the Company entered into a first amendment to each of the GS Guaranties, each dated as of the date of the applicable Amended GS Repurchase Agreement (collectively, the "Amended GS Guaranties"). Pursuant to the Amended GS Guaranties, the liquidity covenant was amended to (i) delete the threshold applicable for the first six months following the closing date of the applicable Amended GS Repurchase Agreements and (ii) limit the liquidity the Company is required to maintain to a maximum of $37.5 million.

Overall Portfolio

As of June 30, 2025, our portfolio was comprised of the following ($ in thousands):

Results of Operations

The following table sets forth the results of our operations for the three and six months ended June 30, 2025 ($ in thousands):

Interest income

Interest Income

For the three and six months ended June 30, 2025 interest income was $30.6 million and $50.1 million, respectively, primarily as a result of interest and origination fees earned on real estate related debt.

Expenses

Organizational costs

For the three and six months ended June 30, 2025, organizational costs were $0.2 million and $0.3 million, respectively. These costs were incurred primarily in conjunction with the Company's formation.

General and administrative

For the three and six months ended June 30, 2025, general and administrative costs were $3.6 million and $5.8 million, respectively, primarily as a result of professional services and operating expenses.

Management fee

For the three and six months ended June 30, 2025, management fee expense was $2.4 million primarily as a result of the expiration of fee waivers in 2025.

Performance participation allocation

For the three and six months ended June 30, 2025, performance participation allocation expense was $0.1 million primarily as a result of the expiration of fee waivers in 2025.

Other income (expense)

Interest expense

For the three and six months ended June 30, 2025, interest expense was $9.5 million and $16.0 million, respectively, primarily as a result of borrowings on the Repurchase Facilities and the Revolving Credit Facility.

Net unrealized loss on investments

For the three and six months ended June 30, 2025, net unrealized loss on investments was $0.3 million and $1.0 million, respectively, primarily as a result of changes in fair value of the mortgage servicing rights portfolio.

Net realized loss on investments

For the three and six months ended June 30, 2025, net realized loss on investments was $0.3 million and $0.8 million, respectively, primarily as a result of the resolution of tax lien investments in jurisdictions where upfront premiums are not recoverable, resulting in a write-off of the acquisition premium. These realized losses are consistent with our original underwriting assumptions. Income from resolved tax lien investments, subject to such realized losses, are included in interest income on the Company's Condensed Consolidated Statements of Operations.

Other income

For the three and six months ended June 30, 2025, other income was $4.6 million and $6.4 million, respectively, primarily as a result of investment income from equity investments and money market interest.

Net Asset Value

EA RESIG, LLC, a subsidiary of Eisner Advisory Group LLC, calculates our NAV per share, which our Adviser subsequently reviews and confirms the calculations in connection therewith, in each case, in accordance with the valuation guidelines that have been approved by our board of trustees. Our total NAV presented in the following tables includes the NAV of our outstanding classes of common shares, which includes Class B, Class R, Class J-1 shares, Class J-2 shares, Class J-3 shares, Class J-4 shares, Class J-5 shares, Class S, Class D, Class I and Class E common shares. The following table provides a breakdown of the major components of our NAV as of June 30, 2025 ($ in thousands):

(1)Includes 1,281,686 shares of common stock held by affiliates of the Adviser that are classified as redeemable common stock.

The following table provides a breakdown of our total NAV and NAV per share by class as of June 30, 2025 ($ in thousands, except per share data):

(1) Class E shares are classified as redeemable common stock. The ability of the Class E holders to redeem the Class E shares for cash is outside of the Company's control, therefore, the Company has classified these Class E shares that are held by an affiliate of the Company as redeemable common stock.

The following table reconciles equity per our Condensed Consolidated Balance Sheets to our NAV ($ in thousands):

The following details the adjustments to reconcile accounting principles generally accepted in GAAP equity to our NAV:

Distributions

Beginning on August 31, 2024, we declared monthly distributions for each class of our common shares, which are generally paid four days after month-end. The net distribution may vary for each class based on the applicable shareholder servicing fee, which is deducted from the monthly distribution per share and paid directly to Independent Brokerage Solutions LLC (the prior dealer manager) or, after April 11, 2025, the Dealer Manager, for further remittance to the applicable distributor.

The following table details the total net distribution for each of our share classes for the six months ended June 30, 2025:

For the six months ended June 30, 2025, we declared net distributions in the amount of $27.2 million. The Company intends for long-term cumulative distributions to be funded primarily from operating cash flows.

The following table details our distributions declared for the six months ended June 30, 2025 ($ in thousands):

Liquidity and Capital Resources

Liquidity

We believe we have sufficient liquidity to operate our business, with immediate liquidity comprised of cash and cash equivalents of $161.4 million and available borrowings under our Repurchase Facilities and Revolving Credit Facility as of June 30, 2025 which may include borrowings secured by our existing portfolio. In addition to our immediate liquidity, we obtain incremental liquidity through the sale of our common shares, from which we generated proceeds of approximately $787.3 million for the six months ended June 30, 2025. In addition, we may incur indebtedness secured by our real estate and real estate debt investments, borrow money through unsecured financings, or incur other forms of indebtedness. We closely monitor our liquidity position and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for at least the next 12 months.

Our primary use of cash will be for (i) origination or acquisition of CRE debt and investments in real estate-related assets, (ii) the cost of operations (including the management fee and performance participation), (iii) debt service of any borrowings, (iv) periodic repurchases, including under our share repurchase plan, and (v) cash distributions (if any) to the holders of our common shares to the extent declared by our board of trustees.

Our cash needs for acquisitions and other capital investments will be funded primarily from the sale of common shares and through the incurrence or assumption of debt. We plan on fulfilling our outstanding commitment obligations for commercial real estate loan investments and investments in real-estate related assets from the sale of common shares. Other potential future sources of capital include secured or unsecured financings from banks or other lenders and proceeds from the sale of assets. If necessary, we may use financings or other sources of capital in the event of unforeseen significant capital expenditures. We continue to believe that our current liquidity position is sufficient to meet the need of our expected investment activity.

Capital Resources

For the six months ended June 30, 2025, we issued and sold 39,110,289 common shares, consisting of 12,803,227 Class B shares, 3,470,735 Class R shares, 15,552,695 Class J-1 shares, 3,284,176 Class J-2 shares, 1,281,308 Class I shares and 145,220 Class E shares to accredited investors in our private offering, amounting to proceeds of $787.3 million as payment for such shares, including shares issued pursuant to our distribution reinvestment plan. During the six months ended June 30, 2025, we repurchased 9,080 common shares for $0.2 million.

As of June 30, 2025, we had received aggregate proceeds of $1.0 billion from the issuance and sale of common shares in our private offering. As of June 30, 2025, after giving effect to shares issued pursuant to our distribution reinvestment plan, share transfers, conversions, and redemptions we had an aggregate of 50,637,702 common shares outstanding, consisting of 22,219,498 Class B shares, 4,431,569 Class R shares, 15,552,695 Class J-1 shares, 3,284,176 Class J-2 shares, 2,275,708 Class J-4 shares, 297,221 Class S shares, 1,295,148 Class I shares and 1,281,686 Class E shares.

Cash Flows

Cash flows provided by operating activities were $28.6 million for the six months ended June 30, 2025. The cash flows provided by operating activities were primarily due to interest received of $45.3 million, partially offset by $13.4 million interest paid, general and administrative expenses of $5.8 million and management fee expense of $2.4 million.

Cash flows used in investing activities were $1.3 billion for the six months ended June 30, 2025. The cash flows used in investing activities were primarily due to $938.7 million and $412.3 million used to fund CRE loan investments and investments in real estate-related assets, respectively, partially offset by $43.8 million of tax lien repayments.

Cash flows provided by financing activities were $1.3 billion for the six months ended June 30, 2025. The cash flows provided by financing activities were primarily due to cash flows of $669.4 million from the issuance of our common shares, $640.1 million from additional borrowings and $41.8 million from subscriptions received in advance.

Future Cash Requirements

The following table aggregates our contractual obligations and commitments as of June 30, 2025 ($ in thousands):

Critical Accounting Estimates

The preparation of our condensed consolidated financial statements in accordance with GAAP involves significant judgments and assumptions and requires estimates about matters that are inherently uncertain. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our condensed consolidated financial statements. The following is a summary of our significant accounting policies that we believe are the most affected by our judgments, estimates, and assumptions. See Note 2 to our condensed consolidated financial statements. See "Item 1. Financial Statements and Supplementary Data-Notes to Condensed Consolidated Financial Statements-Note 2. Summary of Significant Accounting Policies" for further descriptions of the below accounting policies.

Fair Value Option

The guidance in Accounting Standards Codification ("ASC") 825, Financial Instruments, provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets. In the cases of loans and investments in real estate-related assets for which the fair value option is elected, loan origination fees and costs related to the origination or acquisition of the instrument should be immediately recognized in earnings. Unrealized gains and losses on assets for which the fair value option has been elected are also reported in earnings without deferral. This is because under the fair value option, a lender reports the instrument at its exit price (i.e., the price that would be received to sell the instrument in an orderly transaction), which reflects the market's assessment of the instrument's cash flows and risks and does not include any entity-specific costs or fees.

As discussed in "Item 1. Financial Statements and Supplementary Data-Notes to Condensed Consolidated Financial Statements-Note 2. Summary of Significant Accounting Policies", the Company has elected the fair value option for certain eligible financial assets including CRE loans and real estate-related investments.

The decision to elect the fair value option is determined on an instrument-by-instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets measured at fair value pursuant to this guidance are required to be

reported separately on the Company's Condensed Consolidated Balance Sheets from those instruments using another accounting method.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, "Income Statement(Topic 220-40): Reporting Comprehensive Income - Expense Disaggregation Disclosures" ("Topic 220-40"). Topic 220-40 requires the disaggregation of expenses into required categories in disclosures within the footnotes of the financial statements. The FASB identified the required expense categories as: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion and amortization recognized as part of oil- and gas producing activities or other depletion expenses. The guidance is effective for annual periods beginning after December 15, 2026. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. This guidance should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the impact of adopting this new guidance on our financial statement disclosures.