NextTrip, Inc 8-K/A, filed Jun 23, 2025
NextTrip, Inc. (NTRP)
About this 8-K/A
NextTrip, Inc filed this 8-K/A on June 23, 2025, reporting on events of April 14, 2025.
Items reported
- Item 9.01: Financial statements and exhibits
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WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Explanatory Note
On April 14, 2025, NextTrip, Inc. (the “Company”) filed a Current Report on Form 8-K (the “April Report”) with the Securities and Exchange Commission (the “Commission”) disclosing the completion of the previously announced acquisition (the “Acquisition”) contemplated by the Membership Interest Purchase Agreement, dated February 6, 2025 (the “Purchase Agreement”), by and among the Company, FSA Travel, LLC (“FSA”), John McMahon, as Majority Member, and the other members of FSA included on the signature page thereto (Mr. McMahon together with such other members, collectively the “FSA Members”).
Pursuant to the terms of the Purchase Agreement, on February 10, 2025, the Company purchased 9,608 membership units of FSA (equal to a 49% ownership stake in FSA immediately after closing) from FSA in exchange for consideration consisting of $500,000 in cash and 161,291 shares of Series O Nonvoting Convertible Preferred Stock (“Series O Preferred”) of the Company (the “Initial Closing”). As disclosed in the April Report, on April 9, 2025, the Company exercised its option to purchase the remaining 51% of the membership units in FSA from the FSA Members in exchange for consideration consisting of an additional $500,000 in cash and 161,291 shares of Series O Preferred (the “Final Closing”). As a result, immediately after the Final Closing, FSA became a wholly owned subsidiary of the Company.
This Current Report on Form 8-K/A (this “Amendment”) amends and supplements Item 9.01 of the April Report to include the financial statements and pro forma financial information required by Items 9.01(a) and (b) of Form 8-K, respectively, which were not included in the April Report pursuant to Items 9.01(a)(3) and (b)(2) of Form 8-K. Except as provided herein, the disclosures made in the April Report remain unchanged. This Amendment should be read together with the April Report and that Current Report on Form 8-K filed by the Company with the Commission on February 11, 2025, which provide a more complete description of the Purchase Agreement and the transactions contemplated thereby, including the Initial Closing and the Final Closing, amongst other things.
The pro forma financial information included in this Amendment has been presented for informational purposes only. It does not purport to represent the actual results of operations that the Company and FSA would have achieved had the companies been combined during the periods presented in the pro forma financial information and is not intended to project the future results of operations that the combined company may achieve.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of businesses acquired.
The audited financial statements of FSA as of and for the fiscal years ended December 31, 2024 and 2023, including the accompanying notes and the independent auditor’s report related thereto, are attached as Exhibit 99.1 to this Amendment and are incorporated herein by reference. The consent of Haynie & Company, FSA’s independent registered public accounting firm, is attached as Exhibit 23.1 to this Amendment.
(b) Pro forma financial information.
The unaudited pro forma condensed combined balance sheet of the Company as of February 28, 2025, and the unaudited pro forma condensed combined statement of operations of the Company for the year ended February 28, 2025, including the accompanying notes, are attached as Exhibit 99.2 to this Amendment and incorporated herein by reference. The unaudited pro forma financial information gives effect to the Acquisition on the basis of, and subject to, the assumptions set forth with Article 11 of Regulation S-X.
(d) Exhibits.
| Exhibit Number | Description | |
| 23.1 | Consent of Haynie & Company, the independent auditors of FSA Travel, LLC. | |
| 99.1 | Audited financial statements of FSA Travel, LLC as of and for the fiscal years ended December 31, 2024 and 2023, including the related notes thereto. | |
| 99.2 | Unaudited pro forma condensed combined financial information of NextTrip, Inc. as of and for the fiscal year ended February 28, 2025, including the related notes thereto. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NEXTTRIP, INC. | ||
| Date: June 23, 2025 | By: | /s/ William Kerby |
| Name: | William Kerby | |
| Title: | Chief Executive Officer | |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-174897, 333-197616, 333-212612, 333-222369, 333-228628, 333-233348, 333-250181, 333-258683, 333-259523, and 333-267943 on Form S-8, and Registration Statement No. 333-288212 on Form S-1 of NextTrip, Inc. of our report dated June 23, 2025, relating to our audit of the financial statements of FSA Travel, LLC as of and for the years ended December 31, 2024 and December 31, 2023 appearing in this Current Report on Form 8-K/A of NextTrip, Inc.
/s/ Haynie & Company
Haynie & Company
Salt Lake City, Utah
June 23, 2025
Exhibit 99.1
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors and Shareholders
of FSA Travel, LLC
Opinion
We have audited the accompanying financial statements of FSA Travel, LLC (a New York corporation), which comprise the balance sheets as of December 31, 2024, and 2023, and the related statements of operations, members’ equity, and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of FSA Travel, LLC as of December 31, 2024, and 2023, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of FSA Travel, LLC and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred losses since incorporation and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding those matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about FSA Travel, LLC’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards, we:
| ● | Exercise professional judgment and maintain professional skepticism throughout the audit. |
| ● | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of FSA Travel, LLC’s internal control. Accordingly, no such opinion is expressed. |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
| ● | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about FSA Travel, LLC’s ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
/s/ Haynie & Company
Haynie & Company
Salt Lake City, Utah
June 23, 2025
FSA TRAVEL, LLC
BALANCE SHEETS
AS OF DECEMBER 31, 2024 AND 2023
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 6,987 | $ | 122,213 | ||||
| Accounts receivable | 27,311 | 52,225 | ||||||
| Total Current Assets | 34,298 | 174,438 | ||||||
| Non-Current Assets: | ||||||||
| Property and Equipment, net | - | - | ||||||
| Intangible Assets, net | 593,611 | 657,778 | ||||||
| Total Non-Current Assets | 593,611 | 657,778 | ||||||
| TOTAL ASSETS | $ | 627,909 | $ | 832,216 | ||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 20,315 | $ | 19,610 | ||||
| Accrued expenses | 2,649 | 6,230 | ||||||
| Total Current Liabilities | 22,964 | 25,840 | ||||||
| Non-Current Liabilities | ||||||||
| SBA loan | 199,100 | 199,100 | ||||||
| Total Non-Current Liabilities | 199,100 | 199,100 | ||||||
| TOTAL LIABILITIES | 222,064 | 224,940 | ||||||
| Commitments and Contingencies | - | - | ||||||
| MEMBERS’ EQUITY | ||||||||
| Additional paid-in capital | 2,219,000 | 2,219,000 | ||||||
| Accumulated deficit | (1,813,155 | ) | (1,611,724 | ) | ||||
| TOTAL MEMBERS’ EQUITY | 405,845 | 607,276 | ||||||
| TOTAL LIABILITIES AND MEMBERS’ EQUITY | $ | 627,909 | $ | 832,216 | ||||
See accompanying notes to financial statements
FSA TRAVEL, LLC
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| Twelve Months Ended | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| REVENUES | $ | 381,698 | $ | 476,724 | ||||
| OPERATING EXPENSES | ||||||||
| Salaries and benefits | 339,206 | 322,074 | ||||||
| General and administrative | 9,369 | 10,529 | ||||||
| Marketing and advertising | - | 2,454 | ||||||
| Technology | 128,017 | 95,098 | ||||||
| Professional services | 23,850 | 53,921 | ||||||
| Depreciation and amortization | 64,167 | 65,008 | ||||||
| Other expense | 6,866 | 2,896 | ||||||
| Total Operating Expenses | 571,475 | 551,980 | ||||||
| OPERATING LOSS | (189,777 | ) | (75,256 | ) | ||||
| OTHER EXPENSE | ||||||||
| Interest Expense | (11,654 | ) | (11,602 | ) | ||||
| Total Other Expense | (11,654 | ) | (11,602 | ) | ||||
| Net Loss | $ | (201,431 | ) | $ | (86,858 | ) | ||
See accompanying notes to financial statements
FSA TRAVEL, LLC
STATEMENTS OF MEMBERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| Z Units | Common Units | Additional Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||
| Balance, December 31, 2022 | 890 | 10,000 | $ | 2,219,000 | $ | (1,524,866 | ) | $ | 694,134 | |||||||||||
| Net Loss | - | - | - | (86,858 | ) | (86,858 | ) | |||||||||||||
| Balance, December 31, 2023 | 890 | 10,000 | $ | 2,219,000 | $ | (1,611,724 | ) | $ | 607,276 | |||||||||||
| Net Loss | - | - | - | (201,431 | ) | (201,431 | ) | |||||||||||||
| Balance, December 31, 2024 | 890 | 10,000 | $ | 2,219,000 | $ | (1,813,155 | ) | $ | 405,845 | |||||||||||
See accompanying notes to financial statements
FSA TRAVEL, LLC
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| 2024 | 2023 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (201,431 | ) | $ | (86,858 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of intangible assets | 64,167 | 65,008 | ||||||
| Changes in Operating Assets and Liabilities | ||||||||
| Accounts receivable | 24,914 | (52,225 | ) | |||||
| Prepaid expenses | - | 23,700 | ||||||
| Accounts payable and accrued expenses | (2,876 | ) | (3,101 | ) | ||||
| Net Cash Used in operating activities | (115,226 | ) | (53,476 | ) | ||||
| Decrease in cash | (115,226 | ) | (53,476 | ) | ||||
| Cash at Beginning of Period | 122,213 | 175,689 | ||||||
| Cash at the End of Period | $ | 6,987 | $ | 122,213 | ||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest | $ | 10,945 | $ | 10,954 | ||||
| Cash paid for taxes | $ | - | $ | - | ||||
See accompanying notes to financial statements
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2024 AND 2023
| 1. | Business Description and Going Concern |
FSA Travel, LLC (“Five Star”, “FSA”, or the “Company”) was organized on March 9, 2018, under the laws of the State of New York. The Limited Liability Company Agreement was entered into on August 18, 2018, and made effective on that date. The Company’s head office is located at 265 Read Avenue, Yonkers, NY 10707.
The Company is a premier high-end travel agency known for its curated collection of over 5,000 luxury hotels and resorts worldwide, providing personalized recommendations and high-end travel solutions for travelers. Since 2005, FSA has been a leader in luxury travel by offering the most comprehensive, hand-picked collection of four and five-star luxury hotels and resorts worldwide and provides a full range of travel products including airfare, transportation, luxury river and ocean cruises, group and meeting services, concierge services, and more.
Going Concern
As of December 31, 2024, and 2023, the Company had an accumulated deficit of $1,813,154 and $1,611,724 respectively, and working capital of $11,334 and $148,598, respectively, and has incurred losses since incorporation. The Company will either need to sell to a strategic buyer with existing capabilities to benefit from audience, relationships, technology and top-line revenues or will need to raise additional funds through equity or debt financings to support the on-going operations, increase market penetration of our products, expand the marketing and development of our travel and technology driven products, provide capital expenditures for additional equipment and development costs, payment obligations, and systems for managing the business including covering other operating costs until the planned revenue streams are fully implemented and begin to offset operating costs. Failure to sell the Company or obtain additional capital to finance the Company’s working capital needs on acceptable terms, or at all, would negatively impact the Company’s financial condition and liquidity.
In light of the foregoing, there is substantial doubt about our ability to continue as a going concern for 12 months from the date of the filing of this Report.
| 2. | Summary of Significant Accounting Policies |
Basis of Presentation and Principles of Consolidation
The accompanying financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.
Functional and presentation currency
These financial statements are presented in United States dollars (“USD”), which is the Company’s functional and reporting currency. All financial information has been rounded to the nearest dollar except where otherwise indicated.
Limited Liability of Members
The liability of the Managers to the Company and the Members shall be limited to the extent, now or hereafter set forth in the Articles of the Operating Agreement and as provided under the New York Act.
Except as otherwise provided in the New York Act or by Applicable Law, no Member, Manager or Officer will be obligated personally for any debt, obligation or liability of the Company or of any Company subsidiaries, whether arising in contract, tort or otherwise, solely by reason of being a Member, Manager and/or Officer.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These differences could have a material effect on the Company’s future results of operations and financial position. Significant items subject to estimates and assumptions include the carrying amounts of intangible assets, depreciation and amortization.
Information about key assumptions and estimation uncertainty that has a significant risk of resulting in a material adjustment to the carrying amounts of the Company’s assets and liabilities within the next financial year are referenced in the notes to the financial statements as follows:
| ● | The assessment of the Company to continue as a going concern; | |
| ● | The measurement and useful life of intangible assets and property and equipment | |
| ● | Recoverability of long-lived assets |
Cash and Cash Equivalents
Cash consists of amounts denominated in US dollars. The Company has not experienced any losses on such accounts. The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of December 31, 2024 or 2023.
Prepaids
The Company records cash paid in advance for goods and/or services to be received in the future as prepaid expenses. Prepaid expenses are expensed over time according to the terms of the purchase. Other current assets are recognized when it is probable that the future economic benefits will flow to the Company and the asset has a cost or value that can be measured reliably. It is then charged to expense over the expected number of periods during which economic benefits will be realized.
Accounts Receivable
Accounts receivables are recorded at the invoiced amount and do not bear interest. The allowance for credit losses is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable.
The Company considers accounts receivable to be fully collectible; accordingly, no allowance for credit losses is required. If amounts become uncollectible, they will be charged to operations when that determination is made.
Accounts receivables balances as of December 31, 2024 and 2023 were $27,311 and $52,225, respectively.
Property and Equipment
Recognition and measurement
Items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. When parts of an item of property and equipment have different estimated useful lives, they are accounted for as separate items within property and equipment. The costs of the ongoing regular repairs and maintenance of property and equipment are recognized in the period in which they are incurred.
Depreciation
Depreciation is recognized in profit or loss over the estimated useful lives of each part of an item of property and equipment in a manner that most closely reflects management’s estimated future consumption of the future economic benefits embodied in the asset. The estimated useful lives for the Company’s property and equipment are as follows:
| Category | Method | Estimated useful life | ||
| Furniture & Fixtures | Straight line | 5 years | ||
| Computer & Equipment | Straight line | 3 years |
Intangible assets
The Company measures separately acquired intangible assets at cost less accumulated amortization and impairment losses. The Company recognizes internally developed intangible assets when it has determined that the completion of such is technically feasible, and the Company has sufficient resources to complete the development. Subsequent expenditures are capitalized when they increase the future economic benefits of the associated asset. All other expenditures are recorded in profit or loss as incurred.
The Company assesses whether the life of intangible asset is finite or indefinite. The Company reviews the amortization method and period of use of its intangible assets at least annually. Changes in the expected useful life or period of consumption of future economic benefits associated with the asset are accounted for prospectively by changing the amortization method or period as a change in accounting estimates in profit or loss. The Company has assessed the useful life of its trademarks as indefinite.
The estimated useful lives for the Company’s finite life intangible assets are as follows:
| Category | Method | Estimated useful life | ||
| Software | Straight line | 15 years | ||
| Domain name | Straight line | 20 years | ||
| Customer database | Straight line | 10 years |
Impairment of Intangible Assets
In accordance with ASC 350-30-65 “Goodwill and Other Intangible Assets”, the Company assesses the impairment of identifiable intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important, which could trigger an impairment review include the following:
1. Significant underperformance compared to historical or projected future operating results.
2. Significant changes in the manner or use of the acquired assets or the strategy for the overall business, and
3. Significant negative industry or economic trends.
When the Company determines that the carrying value of an intangible asset may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent to the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. Intangible assets that have finite useful lives are amortized over their useful lives.
Concentration of Credit Risk
Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash. All of the Company’s cash is held at high credit quality financial institutions. At December 31, 2024 and 2023 the Company did not have any balances over federally insured limits. There is no credit risk in accounts receivable as they are all deemed collectable.
Fair Value of Financial Instruments
The Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair Value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:
| ● | Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments. | |
| ● | Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace. | |
| ● | Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires a significant judgment or estimation. |
Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires it to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.
The carrying amounts of the Company’s financial instruments including cash, accounts receivable, accounts payable, accrued expenses, and notes payable are of approximately fair value due to the short-term maturities of these instruments.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic No. 606. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition guidance under prior U.S. GAAP and replaced it with a principles-based approach for determining revenue recognition. The core principle of the standard is the recognition of revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In general, we determine revenue recognition by: (1) identifying the contract, or contracts, with our customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to performance obligations in the contract; and (5) recognizing revenue when, or as, we satisfy performance obligations by transferring the promised goods or services.
The Company provides online travel booking services for luxury hotels, cruises, group travel, and other premium travel-related offerings through its platform. In all transactions, the Company operates as an agent, facilitating the reservation between the customer and the travel service provider. As such, revenue is recognized on a net basis, representing only the commission or service fee earned.
In accordance with ASC 606, the Company evaluates its role in the transaction and has determined it does not control the underlying travel services prior to transfer to the customer. Consequently, the Company concludes that it is acting as an agent rather than a principal.
Revenue is recognized on the date of travel, which reflects the point at which the Company’s performance obligation is satisfied and ensures that any cancellations or changes have been accounted for. Booking changes, cancellations, and refund policies are governed by the individual travel providers.
Marketing revenue is derived from email newsletter participation as well as hotel activation fees and priority placement in the hotel city listing section of the website. Revenue is recognized in the month that the activation is live on Five Star Alliance or when email newsletter is distributed.
Marketing and Advertising
Marketing and advertising expenses consist primarily of marketing and promotional expenses, expenses related to our participation in industry conferences, and public relations expenses.
Sales and marketing expenses are charged to expense as incurred. Sales and marketing expense for the years ended December 31, 2024 and 2023, was $0 and $2,454, respectively.
Income Taxes
The Company is organized as a limited liability company and is treated as a partnership for U.S. federal and most applicable state income tax purposes. As such, the Company is generally not subject to federal income taxes at the entity level. Instead, each member is individually responsible for reporting their allocable share of the Company’s income, deductions, losses, and credits on their respective tax returns. Accordingly, no provision for income taxes has been included in the accompanying financial statements.
Under current U.S. Treasury Regulations, certain business entities may be classified as associations taxable as corporations if they possess corporate characteristics such as centralized management, continuity of life, free transferability of interests, and limited liability. Management has evaluated these criteria and determined that the Company does not meet the conditions to be treated as an association taxable as a corporation. As such, the Company continues to be treated as a partnership for income tax reporting purposes. A finding that the partnership is an association taxable as a corporation could have a material adverse effect on the financial position and results of operations of the Company.
Management has evaluated the Company’s tax positions in accordance with ASC 740, Income Taxes, and has concluded that there are no uncertain tax positions requiring recognition or disclosure in the financial statements. The Company is subject to routine examination by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
Recently adopted accounting pronouncements
Effective January 1, 2023, the Company adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and related amendments. ASU 2016-13 introduces a new impairment model known as the current expected credit losses (CECL) model, which requires entities to estimate expected credit losses over the life of the financial instrument and to recognize those expected losses at the time the financial asset is originated or acquired.
The Company adopted the standard using the modified retrospective approach. Upon adoption, the Company evaluated its financial assets within the scope of the standard, primarily trade receivables and other short-term financial instruments. The adoption resulted in a change in the methodology used to estimate credit losses, from the incurred loss model to a model based on expected losses.
The adoption of ASC 326 did not have a material impact on the Company’s financial statements. A cumulative-effect adjustment to retained earnings was not required as of the date of adoption.
The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements.
| 3. | Property and Equipment |
Property and equipment, consisting of office and computer equipment, was fully depreciated as of December 31, 2024 and 2023. No property and equipment was purchased during either year. Depreciation expense for the years ended December 31, 2024 and 2023 was $0 and $841, respectively.
| 4. | Intangible Assets |
On August 20, 2018, the Company entered into an Asset Purchase Agreement (the “APA”) with Questex, LLC whereby the Company acquired assets used exclusively in the conduct of its business of luxury hotel and resort reservations for a purchase price of $1,000,000. Management determined that all purchased tangible assets had no value and accordingly the entire purchase price was allocated to intangible assets and is being amortized over 10-20 years.
Intangible assets as of December 31, 2024, and 2023 consisted of the following:
| December 31, 2024 | December 31, 2023 | |||||||
| Purchased intangible assets | $ | 1,000,000 | $ | 1,000,000 | ||||
| Less: Accumulated amortization | (406,389 | ) | (342,222 | ) | ||||
| Intangible assets, net of amortization | $ | 593,611 | $ | 657,778 | ||||
Amortization expense for the years ended December 31, 2024 and 2023 was $64,167 and $64,167, respectively.
In accordance with ASC 350-30, Intangibles—Goodwill and Other, the Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Based on management’s review as of December 31, 2024 and 2023, no indicators of impairment were identified, and no impairment losses have been recognized to date.
| 5. | Accounts Payable and Accrued Liabilities |
As of December 31, 2024, the Company had accounts payable of $20,315 and accrued expenses of $2,649, compared to accounts payable of $19,610 and accrued expenses of $6,230 of accrued expenses for the year ended December 31, 2023.
| 6. | Income Taxes |
The Company is organized as a limited liability company and is treated as a partnership for U.S. federal and most applicable state income tax purposes. As such, the Company is generally not subject to federal income taxes at the entity level. Instead, each member is individually responsible for reporting their allocable share of the Company’s income, deductions, losses, and credits on their respective tax returns. Accordingly, no provision for income taxes has been included in the accompanying financial statements.
The income, gains, losses, deductions and expenses of the Company are allocated among the Members pursuant to the terms of the FSA Limited Liability Company Agreement.
| 7. | SBA Loan |
On May 12, 2020, the Company was granted an Economic Injury Disaster Loan (“EIDL”) from the U.S. Small Business Administration (“SBA”) in the original principal amount of $50,500. The loan bears interest at a fixed rate of 3.75% per annum, with interest accruing only on funds actually advanced. Under the terms of the loan, installment payments of $247 per month, including principal and interest, began twelve months from the date of the promissory note, with the remaining balance of principal and interest due thirty years from the date of the note. Payments are to be applied first to accrued interest and then to outstanding principal.
On October 4, 2021, the SBA approved an amendment to the EIDL, increasing the total loan amount to $199,100. As a result of the increased principal, the required monthly installment payment was adjusted to $995, including principal and interest, with the maturity date and other terms of the loan remaining unchanged.
As of December 31, 2024, and 2023 the outstanding balance of the EIDL loan was $199,100, and accrued interest payable was $2,649 and $6,230, respectively.
The EIDL loan is secured by a general security interest in the Company’s assets.
| 8. | Members’ Equity |
Common Units
Common Units represent a fractional part of a Unitholders’ interest in the profits, losses, and distributions of the Company. The Common Units have all of the voting rights. For the years ended December 31, 2024 and 1023, the Company had 10,000 Common Units outstanding, all of which were held by John McMahon, the Company’s Managing Member.
Class Z Units
Class Z Units represent a fractional part of a Unitholders’ interest in the profits, losses, and distributions of the Company. Class Z Units have no voting, consent, or similar rights. For the years ended December 31, 2024 and 2023, the Company had 890 Class Z Units issued and outstanding.
| 9. | Commitments and Contingencies |
The Company may be involved, from time to time, in litigation, other legal claims and proceedings involving matters associated with or incidental to our business, including, among other things, matters involving breach of contract claims, intellectual property, employment issues, and other related claims and vendor matters. For the years ended December 31, 2024 and 2023, the Company had no outstanding or unresolved litigation or other claims.
| 10. | Subsequent Events |
The Company’s management has evaluated subsequent events after the balance sheet dated as of December 31, 2024 through June 23, 2025, the date of this report.
On February 6, 2025, the Company and John McMahon, as Majority Member, and the other members of FSA (collectively the “FSA Members”) entered into a Membership Interest Sale Agreement (the “Sale Agreement”) with NextTrip, Inc. (“NextTrip”). Pursuant to the Sale Agreement, on February 10, 2025 (the “Initial Closing Date”), NextTrip purchased 9,608 membership units of FSA (equal to a 49% ownership stake in FSA immediately after closing) (the “Initial Interests”) in exchange for NextTrip’s (i) payment of $500,000 in cash and (ii) issuance of 161,291 shares NextTrip Series O Nonvoting Convertible Preferred Stock (“Series O Preferred”) to FSA. In connection with, and as a condition to, the Initial Closing, Mr. McMahon and Courtney May each entered into employment agreements with NextTrip and became an employee of NextTrip as of the Initial Closing Date.
In addition, subject to satisfaction of the conditions discussed below, the Sale Agreement provided NextTrip with an option (the “Option”), in its sole discretion, to purchase the remaining 51% of the membership units from the FSA Members within 60 days of the Initial Closing Date (the “Final Closing Date”), in exchange for (i) the payment by NextTrip to the FSA Members of an aggregate of $500,000 in cash and (ii) the issuance of an aggregate of 161,291 shares of Series O Preferred to the Members (the “Final Closing”). The NextTrip Option was subject to, and contingent upon, satisfaction of the following conditions: (i) the continued employment of Mr. McMahon and Ms. May by NextTrip, subject to limited exceptions, (ii) the completion of a $2,000,000 capital raise by NextTrip, and (iii) the continued operation of FSA by FSA’s existing management until the Final Closing Date.
On April 9, 2025 (the “Final Closing Date”), NextTrip exercised the Option and, in satisfaction of its obligations under the Sale Agreement in connection with the Final Closing, NextTrip paid the FSA Members an aggregate of $500,000 in cash and issued the FSA Members an aggregate of 161,291 shares of Series O Preferred. As a result, as of the Final Closing Date, NextTrip acquired the remaining 51% of the membership units in FSA and FSA became a wholly owned subsidiary of NextTrip.
In addition to the above consideration, the FSA Sale Agreement provided that NextTrip shall make additional payments to the Members upon achievement of certain milestones, as follows:
| 1. | The payment of $100,000 in cash and the issuance of 32,258 shares of Series O Preferred at such time as FSA shall have Travel Bookings of Travel Products for five Groups by FSA, the commissions to FSA for which are scheduled to be collected after the Final Closing; | |
| 2. | The payment of $100,000 in cash and the issuance of 32,258 shares of Series O Preferred at such time as FSA shall have Travel Bookings of cruise related Travel Products, the gross cumulative cost of which to the customers is greater than or equal to $25,000 and the commissions for which are scheduled to collected after the Final Closing; | |
| 3. | The payment of $100,000 in cash and issuance of 32,258 shares of Series O Preferred at such time as FSA shall deliver of all necessary passcodes to allow NextTrip full remote access to the FSA booking engine for use by NextTrip; and | |
| 4. | The payment of $100,000 in cash and issuance 32,258 shares of Series O Preferred at such time as FSA shall have Travel Bookings for Travel Products, the cumulative gross cost of which to the customers is greater than or equal to $1 million and the commissions for which are scheduled to be collected after the Final Closing. |
On April 28, 2025 (the “Milestone Determination Date”), the parties determined that each of the milestones had been achieved, and in satisfaction of its obligations under the Sale Agreement, NextTrip paid the FSA Members an aggregate of $400,000 in cash and issued the FSA Members an aggregate of 120,967 shares of Series O Preferred stock.
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Unaudited Pro Forma Condensed Combined Financial Information
(unless otherwise indicated, all amounts in whole U.S. dollars, except share, per share and par value data)
We are providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the of the completed acquisition of FSA Travel, LLC (“FSA”) by NextTrip, Inc. (“NextTrip” or the “Company”) (the “Acquisition”). The following unaudited pro forma condensed combined financial information presents the combination of the financial information of NextTrip and FSA, adjusted to give effect to the Acquisition. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosure about Acquired and Disposed Businesses.” Release No. 33-10786 replaced the previous pro forma adjustment criteria with simplified requirements to depict the accounting for business combinations (“Transaction Accounting Adjustments”) and permitted the presentation of reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). Management of the Company and FSA (collectively, “Management”) has elected not to present Management’s Adjustments and only present Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information. The Transaction Accounting Adjustments presented in the unaudited pro forma condensed combined financial information are made to provide relevant information necessary for an understanding the accounting for the Acquisition.
The unaudited pro forma combined condensed financial information was derived from and should be read in conjunction with the following historical financial statements and accompanying notes, which are included or incorporated by reference in this Form 8-K and incorporated herein by reference in this section:
| ● | The audited financial statements of NextTrip as of and for the fiscal years ended February 28, 2025 and 2024 included in NextTrip’s Annual Report on Form 10-K for the fiscal year ended February 28, 2025; and |
| ● | The audited financial statements of FSA as of and for the years ended December 31, 2024 and 2023. |
The unaudited pro forma combined condensed financial information should be read together with the historical financial statements of NextTrip and FSA incorporated by reference or included in this Form 8-K and other financial information included in this Form 8-K and incorporated herein by reference.
On February 6, 2025, NextTrip entered into a Membership Purchase Agreement (the “FSA Purchase Agreement”) with FSA. Under the terms of the FSA Purchase Agreement, NextTrip acquired an initial 49% membership interest in FSA for a total of $1,000,000. The acquisition consideration consisted of $500,000 in cash and $500,000 of Series O preferred stock (161,291 shares at $3.10 per share). The investment in FSA was accounted for using the equity method of accounting because NextTrip had significant influence over the investee due to its 49% ownership interest.
Pursuant to the FSA Purchase Agreement, NextTrip was granted an option to acquire the remaining 51% membership interest in FSA for an additional $1,000,000. The option is exercisable within 60 days from the execution of the FSA Purchase Agreement, subject to the satisfaction of certain conditions outlined in the FSA Purchase Agreement. The consideration for the remaining 51% interest would consist of $500,000 in cash and $500,000 of Series O preferred stock (161,291 shares at $3.10 per share).
Pursuant to the FSA Purchase Agreement, if NextTrip exercises its option to acquire the remaining 51% interest, incremental consideration would include four business milestone payments, payable upon achievement of such milestones. The achievement of each milestone would result in a payment of $200,000, consisting of $100,000 in cash and $100,000 in Series O preferred stock (32,258 shares at $3.10 per share). These milestone payments were contingent upon NextTrip’s exercise of the option to acquire the remaining 51% of FSA, and were triggered only if the conditions necessary to exercise the option are satisfied. The total milestone payments are capped at $800,000 (four milestones at $200,000 per milestone). These milestone payments are considered performance-based contingent consideration and were be recognized in the future if and when the related milestones are satisfied, and the payments are made.
As of February 28, 2025, NextTrip recorded its initial 49% investment in FSA at $1,000,000. This amount included $500,000 in cash and $500,000 in Series O preferred stock. The carrying amount of the equity method investment was adjusted based on NextTrip’s share of FSA’s earnings or losses, in accordance with the equity method of accounting. The milestones and contingent consideration payments, including the additional $1,000,000 to acquire the remaining 51% interest, would be recognized in the future if, as, and when the conditions for such payments are satisfied.
On April 9, 2025 (the “Final Closing Date”), upon FSA’s agreement to waive the capital raise condition to closing, NextTrip exercised its option to acquire the remaining 51% of FSA outstanding membership units, in satisfaction of its obligations under the FSA Purchase Agreement. In connection with the Final Closing, NextTrip paid the members of FSA (the “FSA Members”) an aggregate of $500,000 in cash and issued the FSA Members an aggregate of 161,291 shares of Series O preferred stock. As a result, as of the Final Closing Date, FSA became a wholly owned subsidiary of the Company.
The Company and FSA have fiscal years ending on February 28 and December 31, respectively. The unaudited pro forma condensed combined balance sheet as of February 28, 2025 combines the historical audited balance sheet of FSA as of December 31, 2024 and the historical audited balance sheet of NextTrip as of February 28, 2025, and is adjusted for the pro forma effects of the Acquisition.
The unaudited pro forma condensed combined statement of operations for the fiscal year ended February 28, 2025 combines the historical statement of operations of FSA for the fiscal year ended December 31, 2024 and the historical audited consolidated statement of operations of NextTrip for the year ended February 28, 2025, and is adjusted on a pro forma basis as if the Acquisition occurred on March 1, 2024.
The unaudited pro forma condensed combined financial information is for informational purposes only. It does not purport to indicate the results that would have been obtained had the Acquisition actually been completed on the assumed date or for the periods presented, or which may be realized in the future. The pro forma adjustments are based on the information currently available and the assumptions and estimates underlying the pro forma adjustments described in the accompanying notes. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.
NextTrip, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
February 28, 2025
(in USD)
| NextTrip | FSA | Transaction | Pro Forma | |||||||||||||||
February 28, 2025 | December 31, 2024 | Accounting Adjustments | Notes | Combined Company | ||||||||||||||
| ASSETS | ||||||||||||||||||
| Current assets | ||||||||||||||||||
| Cash and cash equivalents | $ | 1,062,367 | $ | 6,987 | $ | (500,000 | ) | 4(B) | $ | 569,354 | ||||||||
| Accounts receivable, net | 22,567 | 27,311 | - | 49,878 | ||||||||||||||
| Prepaid expenses and other current assets | 1,380,575 | - | - | 1,380,575 | ||||||||||||||
| Total current assets | 2,465,509 | 34,298 | (500,000 | ) | 1,999,807 | |||||||||||||
| Property and equipment | 4,119 | - | - | 4,119 | ||||||||||||||
| Intangible assets, net | 2,127,368 | 593,611 | 366,389 | 4(A) | 3,087,368 | |||||||||||||
| Security deposit | 30,167 | - | - | 30,167 | ||||||||||||||
| Goodwill | 1,167,805 | - | 1,473,050 | 4(A) | 2,640,855 | |||||||||||||
| Equity investments | 3,407,610 | - | (992,610 | ) | 4(A) | 2,415,000 | ||||||||||||
| Other prepaid assets | 733,575 | - | - | 733,575 | ||||||||||||||
| Total assets | $ | 9,936,153 | $ | 627,909 | $ | 346,829 | $ | 10,910,891 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
| Current liabilities | ||||||||||||||||||
| Accounts payable | $ | 1,184,404 | $ | 20,315 | $ | - | $ | 1,204,719 | ||||||||||
| Accrued expenses | 721,382 | 2,649 | - | 724,031 | ||||||||||||||
| Deferred revenue | 97,770 | - | - | 97,770 | ||||||||||||||
| Notes payable | 506,004 | - | - | 506,004 | ||||||||||||||
| Notes payable - related parties | 61,526 | - | 500,000 | 4(B) | 561,526 | |||||||||||||
| Other current liabilities | - | - | 800,000 | 4(C) | 800,000 | |||||||||||||
| Total current liabilities | 2,571,086 | 22,964 | 1,300,000 | 3,894,050 | ||||||||||||||
| Long-term liabilities | ||||||||||||||||||
| Long term debt | - | 199,100 | (100,181 | ) | 4(A) | 98,919 | ||||||||||||
| Total Long-term liabilities | - | 199,100 | (100,181 | ) | 98,919 | |||||||||||||
| Total liabilities | 2,571,086 | 222,064 | 1,199,819 | 3,992,969 | ||||||||||||||
| Stockholders equity | ||||||||||||||||||
| Preferred stock | 3,107 | - | 161 | 4(C) | 3,268 | |||||||||||||
| Common stock | 1,657 | - | - | 1,657 | ||||||||||||||
| Additional paid-in-capital | 41,710,126 | 2,219,000 | (1,719,161 | ) | 4(D),4(E) | 42,209,965 | ||||||||||||
| Accumulated deficit | (34,349,823 | ) | (1,813,155 | ) | 866,010 | 4(E) | (35,296,968 | ) | ||||||||||
| Total Stockholders equity | 7,365,067 | 405,845 | (852,990 | ) | 6,917,922 | |||||||||||||
| Total Liabilities and Stockholders equity | $ | 9,936,153 | $ | 627,909 | $ | 346,829 | $ | 10,910,891 | ||||||||||
See accompanying notes to unaudited pro forma condensed combined financial information.
NextTrip, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Fiscal Year Ended February 28, 2025
(in USD)
| NextTrip | FSA | Transaction | Proforma | |||||||||||||||
| February 28, 2025 | December 31, 2024 | Accounting Adjustments | Notes | Combined Company | ||||||||||||||
| Revenue | $ | 501,423 | $ | 381,698 | $ | - | $ | 883,121 | ||||||||||
| Cost of revenue | 498,121 | - | - | 498,121 | ||||||||||||||
| Gross profit | 3,302 | 381,698 | - | 385,000 | ||||||||||||||
| Operating expenses | ||||||||||||||||||
| Salaries and benefits | 2,630,663 | 339,206 | - | 2,969,869 | ||||||||||||||
| Stock-based compensation | 67,874 | - | - | 67,874 | ||||||||||||||
| General and administrative | 95,341 | 9,369 | - | 104,710 | ||||||||||||||
| Stock-Based Compensation | - | - | - | - | ||||||||||||||
| Sales and marketing | 307,166 | - | - | 307,166 | ||||||||||||||
| Professional services fees | 2,228,481 | 23,850 | - | 2,252,331 | ||||||||||||||
| Technology | 843,296 | 128,017 | - | 971,313 | ||||||||||||||
| Organization costs | 213,613 | - | - | 213,613 | ||||||||||||||
| Depreciation and amortization | 713,236 | 64,167 | 60,976 | 5(A) | 838,379 | |||||||||||||
| Other expenses | 317,061 | 6,866 | - | 323,927 | ||||||||||||||
| Total Operating expenses | 7,416,731 | 571,475 | 60,976 | 8,049,182 | ||||||||||||||
| Operating loss | (7,413,429 | ) | (189,777 | ) | (60,976 | ) | (7,664,182 | ) | ||||||||||
| Other (income) expense | ||||||||||||||||||
| Loss on disposal of assets | (90 | ) | - | - | (90 | ) | ||||||||||||
| Loss on extinguishment of liability | (1,134,579 | ) | - | - | (1,134,579 | ) | ||||||||||||
| Loss on promissory note receivable | (1,000,000 | ) | - | - | (1,000,000 | ) | ||||||||||||
| Interest expense, net | (589,039 | ) | (11,654 | ) | (41,288 | ) | 5(B) | (641,981 | ) | |||||||||
| Other income | 16,099 | - | - | 16,099 | ||||||||||||||
| Total other (income) expense | (2,707,609 | ) | (11,654 | ) | (41,288 | ) | (2,760,551 | ) | ||||||||||
| Net loss from continuing operations before taxes | (10,121,038 | ) | (201,431 | ) | (102,264 | ) | (10,424,733 | ) | ||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||||
| Net loss from continuing operations before share of net income (loss) in equity method investee | (10,121,038 | ) | (201,431 | ) | (102,264 | ) | (10,424,733 | ) | ||||||||||
| Share of net loss of equity method investee | (7,390 | ) | - | 7,390 | 5(C) | - | ||||||||||||
| Net loss from continuing operations | (10,128,428 | ) | (201,431 | ) | (94,874 | ) | (10,424,733 | ) | ||||||||||
| Net income from discontinued operations, net of taxes | 8,344 | - | - | 8,344 | ||||||||||||||
| Net loss | $ | (10,120,084 | ) | $ | (201,431 | ) | $ | (94,874 | ) | $ | (10,416,389 | ) | ||||||
| Preferred dividends | (78,600 | ) | - | - | (78,600 | ) | ||||||||||||
| Net loss applicable to common stockholders | $ | (10,198,684 | ) | $ | (201,431 | ) | $ | (94,874 | ) | $ | (10,494,989 | ) | ||||||
| Basic and diluted loss per common share from continuing operations | $ | (2.24 | ) | 6 | $ | (2.28 | ) | |||||||||||
| Basic and diluted loss per common share from discontinued operations | $ | 0.01 | 6 | $ | 0.01 | |||||||||||||
| Basic and diluted loss per common share | $ | (2.23 | ) | 6 | $ | (2.30 | ) | |||||||||||
| Weighted-average common shares outstanding - basic and diluted | 4,566,787 | 6 | 4,566,787 | |||||||||||||||
See accompanying notes to unaudited pro forma condensed combined financial information.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
| (1) | Basis of Presentation |
The unaudited pro forma condensed combined balance sheet as of February 28, 2025 and the unaudited pro forma condensed combined statement of operations for the fiscal year ended February 28, 2025 are presented on a pro forma basis as if the Acquisition had occurred on March 1, 2024, which is the beginning of the earliest period presented.
The unaudited pro forma condensed combined financial information does not include any anticipated operating efficiencies or cost savings and, accordingly, only includes Transaction Accounting Adjustments. The Transaction Accounting Adjustments presented in the unaudited pro forma condensed combined financial information are made to provide relevant information necessary for an understanding of the combined companies and to reflect the accounting for the Acquisition.
The unaudited pro forma condensed combined financial information, including the notes thereto, should be read in conjunction with the NextTrip and FSA historical financial statements, and their respective Management’s Discussion and Analysis of financial condition and results of operations included elsewhere or incorporated by reference in this Form 8-K. The historical financial information of NextTrip and FSA are prepared in accordance with US GAAP.
The unaudited pro forma condensed combined financial information is based on assumptions and adjustments that are described in the accompanying notes. The pro forma adjustments presented herein are preliminary and are based on available financial information and certain estimates and assumptions. Management believes that such assumptions provide a reasonable basis for presenting all the significant effects of the contemplated transactions, and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied to the unaudited pro forma condensed combined financial information. The actual adjustments to the consolidated financial statements of NextTrip will likely differ from the pro forma adjustments herein.
| (2) | Accounting Policies |
Management is performing a comprehensive review of the accounting policies of NextTrip and FSA. As a result of the review, management may identify differences between the accounting policies of the entities which, when confirmed, could have a material impact on the financial statements of the post-Acquisition company. Based on its initial analysis, management has not identified any differences that would have an impact on the unaudited pro forma condensed combined financial information and has not recorded any adjustments.
The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the post-Acquisition company filed consolidated income tax returns during the periods presented.
The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statements of operations for the fiscal year ended February 28, 2025 are based upon the number of the post-Acquisition company’s shares outstanding, assuming the Acquisition occurred on March 1, 2024.
| (3) | Purchase Consideration and Purchase Price Allocation |
The Acquisition will be accounted for as a business combination, with NextTrip as the accounting acquirer, using the acquisition method in accordance with ASC 805, Business Combinations. Under the acquisition method of accounting, the purchase price is allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values, with any excess purchase price allocated to goodwill.
The final purchase price allocation may be different than that reflected in the preliminary pro forma purchase price allocation presented herein, and this difference may be material.
The following table reflects the effect of FSA’s preliminary purchase allocation on the Final Closing Date:
| Fair Value (in USD) | ||||
| Preliminary Consideration Transferred: | ||||
| Cash consideration | $ | 500,000 | ||
| Stock consideration - Series O Preferred Stock | 500,000 | |||
| Contingent consideration - cash | 400,000 | |||
| Contingent consideration - Series O Preferred Stock | 400,000 | |||
| Total preliminary consideration transferred | 1,800,000 | |||
| Fair value of previously held equity method investment | 992,610 | |||
| Total | $ | 2,792,610 | ||
| Identifiable assets acquired and liabilities assumed: | ||||
| Cash and cash equivalents | $ | 458,732 | ||
| Accounts receivable | 5,213 | |||
| Other receivables | 4,000 | |||
| Intangible assets, net | 960,000 | |||
| Trade payables | (222 | ) | ||
| Accrued expenses and other current liabilities | - | |||
| Deferred revenue | (9,243 | ) | ||
| Long-term debt | (98,919 | ) | ||
| Total identifiable net assets acquired | 1,319,560 | |||
| Goodwill | 1,473,050 | |||
| Fair value allocated to net assets acquired | $ | 2,792,610 | ||
Other considerations in the preliminary allocation of the estimated acquisition purchase consideration include the following:
| 1) | Our preliminary valuation used to allocate the purchase price uses a third-party market participant view and assumes there are no synergies unique to the Acquisition. If there were synergies unique to the Acquisition, a higher portion of the purchase consideration would be allocatable to goodwill. |
| 2) | Current asset and current liability carrying values approximate fair value. |
| 3) | We have estimated the assumed debt and acquired intangibles, including goodwill, on preliminary valuation analysis subject to finalization. |
| (4) | Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet |
The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of February 28, 2025:
| A. | To reflect the purchase price allocation adjustments to record FSA’s assets and liabilities at estimated fair value based on the consideration transferred, which included the following: |
| ● | An adjustment of $366,389 for the incremental intangible assets of FSA acquired by NextTrip in the amount of $960,000, which will be amortized over the estimated weighted-average useful life of 8 years. |
| ● | Estimated residual goodwill of $1,473,050 associated with the Acquisition. |
| ● | The removal of NextTrip’s previously held equity method investment in FSA of $992,610. |
| ● | The adjustment of $100,181 to record FSA’s assumed debt at its acquisition-date fair value of $98,919, which discount will be amortized over the remaining term of the loan until maturity on May 15, 2050 using the effective interest method. |
| B. | To reflect the new debt issued by NextTrip to its Chairman of $500,000 to finance the Acquisition of FSA and fund the payment of the cash portion of the purchase consideration of $500,000. The promissory note was issued April 9, 2025 at a fixed interest rate of 7.5% per annum and matures April 8, 2026. The Company did not incur any issuance costs associated with this borrowing. |
| C. | To reflect the fair value of the following contingent consideration that was part of the consideration transferred in the acquisition: |
| ● | $400,000 in liability-classified contingent consideration payable in cash within one year following the acquisition. |
| ● | $400,000 in liability-classified contingent consideration payable in 120,967 shares of Series O preferred stock, par value per share of $0.001, due within one year following the Acquisition. |
| D. | To reflect the issuance of 161,291 shares of Series O preferred stock, par value per share of $0.001, as part of the consideration transferred in the Acquisition. |
| E. | To reflect the elimination of the historical equity of FSA. |
| (5) | Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations |
The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the fiscal year ended February 28, 2025:
| A. | To reflect the incremental amortization expense of $60,976 associated with the acquired intangible assets of FSA of $960,000, assuming the Acquisition occurred on March 1, 2024. |
| B. | To reflect the following: |
| a. | Interest expense of $37,397 associated with the $500,000 loan from NextTrip’s Chairman that was issued to partially fund the Acquisition, assuming the debt was issued on March 1, 2024. |
| b. | The amortization of $3,891 of the fair value adjustment to FSA’s assumed debt, which gave rise to a discount of $100,181 and assumes the Acquisition occurred on March 1, 2024. |
| C. | To remove NextTrip’s historical share of net loss of equity method investee associated with its equity method investment in FSA. |
| (6) | Pro Forma Loss Per Share |
Represents the net loss per share calculated using the historical weighted-average common shares outstanding.
The unaudited pro forma condensed combined financial information has been prepared based on the following weighted-average common shares outstanding:
| (whole share amounts) | Fiscal Year Ended February 28, 2025 | |||
| Pro forma weighted-average number of common outstanding – Basic | 4,566,787 | |||
| Pro forma weighted-average number of common outstanding – Diluted | 4,566,787 | |||
The following potentially dilutive shares were excluded from the computation of unaudited pro forma diluted net loss per share attributable to NextTrip stockholders for the fiscal year ended February 28, 2025 because including them would have been antidilutive:
| (share amounts) | Fiscal Year Ended February 28, 2025 | |||
| Warrants | 3,015,885 | |||
| Stock Options | 76,342 | |||
| Preferred Stock | 3,391,921 | |||
| Total | 6,484,148 | |||
The table above includes 161,291 shares of Series O preferred stock issued as part of the consideration in the Acquisition and 129,032 shares of Series O preferred stock that is contingent consideration payable, less 8,065 shares of common stock previously issued to FSA by NextTrip as a deposit.