NextTrip, Inc 10-Q for FY2026 Q2
NextTrip, Inc. (NTRP)
About this 10-Q
NextTrip, Inc filed this 10-Q on October 15, 2025, covering the quarter ended August 31, 2025 (FY2026 Q2).
Headline figures
Quarter ended August 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $757.65K
- up 390.4% from $154.5K a year earlier
- Net loss
- $2.9M
- compared with a net loss of $1.53M a year earlier
- Diluted EPS
- -$0.39
- compared with -$1.14 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
OR
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated Filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of October 14, 2025, the issuer had shares of common stock outstanding, inclusive of 96,774 shares of common stock classified as mezzanine equity.
NEXTTRIP, INC.
FORM 10-Q
TABLE OF CONTENTS
| 2 |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NEXTTRIP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| August 31, 2025 (unaudited) | February 28, 2025 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Security deposit | ||||||||
| Goodwill | ||||||||
| Equity investments | ||||||||
| Other prepaid assets | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Deferred revenue | ||||||||
| Derivative liability | ||||||||
| Contingent consideration | ||||||||
| Note payable | ||||||||
| Notes payable - related parties | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| SBA EIDL loan | ||||||||
| Line of Credit – related parties | ||||||||
| Total Non-Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Mezzanine Equity | ||||||||
| Common Stock, par value $, shares authorized; and shares issued and outstanding, respectively | ||||||||
| Stockholder’s Equity | ||||||||
| Preferred Stock, $ par value; shares authorized; and shares issued and outstanding, respectively | ||||||||
| Common Stock, par value $, shares authorized; and shares issued and outstanding, respectively | ||||||||
| Additional Paid in Capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities, Mezzanine and Stockholders’ Equity | $ | $ | ||||||
See
accompanying notes to condensed financial statements.
| 3 |
NEXTTRIP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended August 31, | Six Months Ended August 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue (exclusive of depreciation and amortization, shown separately below) | ||||||||||||||||
| Gross profit (loss) | ( | ) | ||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Salaries and benefits | ||||||||||||||||
| Stock based compensation | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Professional service fees | ||||||||||||||||
| Technology | ||||||||||||||||
| Organization costs | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Other expenses | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expenses) | ||||||||||||||||
| Other Income | ||||||||||||||||
| Gain on derivative liability | ||||||||||||||||
| Loss on extinguishment of liability | ( | ) | ||||||||||||||
| Interest income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ||||||||||||
| Net loss from continuing operations before taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss from continuing operations before share of net income (loss) in equity method investee | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Share of net income (loss) of equity method investee | ( | ) | ||||||||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net gain (loss) from discontinued operations, net of taxes | ( | ) | $ | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Preferred dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss Applicable to Common Stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted loss per common share from continuing operations | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Basic and diluted loss per common share from discontinued operations | $ | $ | ) | $ | $ | ) | ||||||||||
| Basic and diluted loss per common share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Basic and diluted weighted average number of common shares | ||||||||||||||||
See
accompanying notes to condensed financial statements.
| 4 |
NEXTTRIP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
For the Three Months Ended August 31, 2025, and August 31, 2024
| Preferred Stock | Common Stock | Additional | ||||||||||||||||||||||||||
| Shares Outstanding | Preferred Stock | Shares Outstanding | Common Stock | Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balances, May 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Preferred stock dividends | - | ( | ) | |||||||||||||||||||||||||
| Issuance of common shares pursuant to private placements | - | |||||||||||||||||||||||||||
| Issuance of common shares for third party services | - | |||||||||||||||||||||||||||
| Warrants issued in connection with debt conversion | - | - | ||||||||||||||||||||||||||
| Issuance of securities for directors’ services | - | - | ||||||||||||||||||||||||||
| Balances, August 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | ||||||||||||||||||||||||||
Shares Outstanding | Preferred Stock | Shares Outstanding | Common Stock | Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balances, May 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Preferred stock dividends | - | - | ( | ) | ||||||||||||||||||||||||
| Issuance of convertible preferred shares | - | |||||||||||||||||||||||||||
| Issuance of common shares for third party services | - | |||||||||||||||||||||||||||
| Issuance of stock options to employees | - | - | ||||||||||||||||||||||||||
| Balances, August 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
See accompanying notes to condensed financial statements.
| 5 |
For the Six Months Ended August 31, 2025, and August 31, 2024
| Preferred Stock | Common Stock | Additional | ||||||||||||||||||||||||||
| Shares Outstanding | Preferred Stock | Shares Outstanding | Common Stock | Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balances, February 28, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Preferred stock dividends | - | ( | ) | |||||||||||||||||||||||||
| Issuance of preferred shares for FSA Travel, LLC acquisition | - | |||||||||||||||||||||||||||
| Issuance of common shares for Journy.tv asset acquisition | - | |||||||||||||||||||||||||||
| Issuance of common shares pursuant to private placements | - | |||||||||||||||||||||||||||
| Issuance of common shares pursuant to reverse acquisition of Sigma | - | ( | ) | |||||||||||||||||||||||||
| Issuance of common shares for third party services | - | |||||||||||||||||||||||||||
| Warrants issued in connection with debt conversion | - | - | ||||||||||||||||||||||||||
| Warrants issued in connection with bridge loan financing | - | - | ||||||||||||||||||||||||||
| Issuance of securities for directors’ services | - | - | ||||||||||||||||||||||||||
| Issuance of stock options to employees | - | - | ||||||||||||||||||||||||||
| Balances, August 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | ||||||||||||||||||||||||||
Shares Outstanding | Preferred Stock | Shares Outstanding | Common Stock | Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balances, February 29, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Balances | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Preferred stock dividends | - | - | ( | ) | ||||||||||||||||||||||||
| Issuance of convertible preferred shares | - | |||||||||||||||||||||||||||
| Issuance of common shares for conversion of preferred stock | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of common shares for third party services | - | |||||||||||||||||||||||||||
| Issuance of stock options to employees | - | - | ||||||||||||||||||||||||||
| Balances, August 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Balances | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
See accompanying notes to condensed financial statements.
| 6 |
NEXTTRIP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended | ||||||||
| August 31, 2025 | August 31, 2024 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net Loss – Continuing Operations | $ | ( | ) | $ | ( | ) | ||
| Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ||||||||
| Noncash Expenses: | ||||||||
| Depreciation and amortization – property and equipment and intangibles | ||||||||
| Amortization of debt discount | ||||||||
| Amortization of prepaid expenses | ||||||||
| Write-off of capitalized technology expenses | ||||||||
| Gain on derivative liability | ( | ) | ||||||
| Stock-based compensation - employees | ||||||||
| Stock-based compensation - directors | ||||||||
| Loss on extinguishment of liability | ||||||||
| Change in Assets and Liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Deferred revenue | ( | ) | ||||||
| Security deposit | ( | ) | ||||||
| NET CASH USED IN OPERATING ACTIVITIES FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ||||
| NET CASH PROVIDED IN OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS | ||||||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES | ||||||||
| Capitalized software development costs | ( | ) | ( | ) | ||||
| TA Pipeline LLC acquisition | ( | ) | ||||||
| FSA Travel LLC acquisition | ( | ) | ||||||
| Journy.tv asset purchase | ( | ) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of convertible preferred shares | ||||||||
| Proceeds from issuance of common shares | ||||||||
| Notes Payable | ( | ) | ||||||
| Advances from related parties | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET CHANGE IN CASH FOR PERIOD | ( | ) | ||||||
| CASH AT BEGINNING OF PERIOD | ||||||||
| CASH AT END OF PERIOD | $ | $ | ||||||
| Supplemental Disclosures: | ||||||||
| Noncash Investing and Financing Activities Disclosure: | ||||||||
| Issuance of preferred shares pursuant to FSA Travel, LLC acquisition | $ | $ | ||||||
| Issuance of common shares pursuant to Journy.tv asset purchase | $ | $ | ||||||
| Issuance of common shares pursuant to TA Pipeline LLC acquisition | ||||||||
| Issuance of common shares for third party services | $ | $ | ||||||
| Preferred stock dividends | $ | $ | ||||||
| Disclosure of Cash Paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income Taxes | $ | $ | ||||||
See accompanying notes to condensed financial statements.
| 7 |
NEXTTRIP, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
August 31, 2025
NOTE 1 - Business Description and Going Concern
Sigma Additive Solutions, Inc. (“Sigma”), the legal acquiror of NextTrip Holdings, Inc., was initially incorporated as Messidor Limited in Nevada on December 23, 1985, and changed its name to Framewaves Inc. in 2001. On September 27, 2010, the name was changed to Sigma Labs, Inc. On May 17, 2022, Sigma Labs, Inc. began doing business as Sigma Additive Solutions, and on August 9, 2022, changed its name to Sigma Additive Solutions, Inc.
On March 11, 2024, Sigma filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation, as amended, with the Secretary of State of the State of Nevada, pursuant to which, effective as of 12:01 a.m. Pacific time on March 13, 2024, among other things, Sigma’s corporate name was changed from Sigma Additive Solutions, Inc. to “NextTrip, Inc.”
The Company’s corporate office is located at 3900 Paseo del Sol, Santa Fe New Mexico 87507. The consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries, NextTrip Holdings Inc. incorporated on October 22, 2015, and Extraordinary Vacations USA, Inc., incorporated on June 24, 2002.
Prior
to the NextPlay Exchange Agreement, as described below, NextTrip Holdings, Inc. (“NTH”) was a wholly-owned subsidiary
of NextTrip Group, LLC (“NTG”), which in turn, was a wholly-owned subsidiary of NextPlay Technologies, Inc. (“NextPlay”).
All of the business operations of NTG were conducted through its subsidiaries. On January 25, 2023, NextPlay and NTG entered into an
Amended and Restated Separation Agreement, Amended and Restated Operating Agreement, and Exchange Agreement (the “NextPlay Exchange
Agreement”), whereby NextPlay transferred its interest in the travel business to NTG. Pursuant to the NextPlay Exchange Agreement,
NextPlay exchanged
Membership Units of NTG for
Preferred Units of NTG, with a value of $
per unit. Prior to the exchange for Preferred Units, NTG had
a payable due to NextPlay of $,
representing cash advances and payment of expenses by NextPlay on behalf of NTG, while NextPlay had obligations to provide ongoing support
to NTH. Such liability was settled by the issuance of the Preferred Units and the waiver of all of NextPlay’s ongoing support obligations
except for a $
The Company provides travel technology solutions with sales originating in the United States, with a primary emphasis on hotels, air, and all-inclusive travel packages. Our proprietary booking engine, branded as NextTrip 2.0, provides travel distributors access to a sizeable inventory.
The Company owns 50% of Next Innovation LLC, a Joint Venture (“Next Innovation”), which is dormant. No activities nor operations occurred through Next Innovation in fiscal years 2024 or 2025 for this entity, and the Company does not have control of Next Innovation and therefore no minority interest was recorded.
Reverse Acquisition
On October 12, 2023, the Company (then known as Sigma) entered into a Share Exchange Agreement (as amended, the “Exchange Agreement”) with NTH, NTG, and William Kerby (the “NextTrip Representative”). Under the terms of the Exchange Agreement, the parties agreed that NTG would sell and transfer to the Company all of the issued and outstanding shares of NTH in exchange for restricted shares of Company common stock (the “Closing Shares”), issuable at closing, and the right to receive up to an additional restricted shares of Company common stock upon satisfaction of certain milestones set forth in the Exchange Agreement (the “Contingent Shares,” and together with the Closing Shares, the “Restricted Shares”), which Restricted Shares are issuable to the members of NTG, on a pro rata basis, under the terms of the Exchange Agreement, subject to certain closing conditions (the “NextTrip Acquisition”). Upon the closing of the NextTrip Acquisition on December 29, 2023, NTH became a wholly-owned subsidiary of the Company.
| 8 |
The Contingent Shares, together with the Closing Shares, will not exceed shares of Company common stock, or approximately % of the issued and outstanding shares of Company common stock immediately prior to the closing. At closing, it was determined that the NextTrip Acquisition would likely result in a change of control, with the members of NTG receiving an aggregate number of shares that exceeds the number of shares held by the legacy shareholders of Sigma, which change in control occurred upon the issuance of certain of the Contingent Shares on March 26, 2025. As a result, the NextTrip Acquisition is accounted for as a reverse acquisition of NTH by the Company, whereby the Company is treated as the legal acquirer and NTH is treated as the accounting acquirer. As a result, the historical financial information for the periods prior to closing of the NextTrip Acquisition presented is that of NTH.
In accordance with ASC 805-40-45-1, the consolidated financial statements prepared following a reverse acquisition are issued under the name of the legal parent (NextTrip, Inc., f/k/a Sigma Additive Solutions, Inc.) but described in the notes to the financial statements as a continuation of the financial statements of the legal subsidiary (NTH), with one adjustment, which is to retroactively adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree. That adjustment is required to reflect the capital of the legal parent.
Under ASC 805-40-45-2, the consolidated financial statements represent the continuation of the legal subsidiary except for the capital structure, as follows:
| (a) | The assets and liabilities of the legal subsidiary recognized and measured at their pre-combination carrying amounts; | |
| (b) | The assets and liabilities of the legal parent recognized and measured in accordance with the guidance in this topic applicable to business combinations (ASC 805); | |
| (c) | The retained earnings and other equity balances of the legal subsidiary before the business combination; | |
| (d) | The amount required to be recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of the legal subsidiary outstanding immediately before the business combination to the fair value of the legal parent determined in accordance with the guidance in ASC 805 applicable to business combinations. However, the equity structure reflects the equity structure of the legal parent, including the equity interests the legal parent issued to affect the combination. Accordingly, the equity structure of the legal subsidiary is restated using the exchange ratio established in the acquisition agreement to reflect the number of shares of the legal parent issued in the reverse acquisition. |
The assets and liabilities of Sigma were recognized at fair value pursuant to ASC 805.
Going
Concern - As of August 31, 2025, and February 28, 2025, the Company had an accumulated deficit of $
In light of the foregoing, there is substantial doubt about the Company’s ability to continue as a going concern for 12 months from the date of the filing of this Report.
| 9 |
NOTE 2 – Summary of Significant Accounting Policies
Basis of Presentation - The accompanying financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America. The financial statements have been prepared on a consolidated basis with those of the Company’s wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at August 31, 2025 and 2024 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The Company suggests these condensed financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2025. The results of operations for the period ended August 31, 2025 are not necessarily indicative of the operating results for the full year.
Reclassification
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on the net earnings (loss) or financial position.
Promissory Note Receivable
NextPlay
is in involuntary bankruptcy proceedings and is in default under the terms of its promissory note for non-payment. As a result, as of
February 28, 2025 the Company established an allowance for credit losses for the full amount of the note of $
Fair Value of Financial Instruments - The Company applies ASC 820, “Fair Value Measurements.” This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
| ● | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
| ● | Level 3 - inputs to valuation methodology are unobservable and significant to the fair measurement. |
The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables, accounts payable, and accrued liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
Put Option
The Company does not use derivative instruments for hedging of market risk or for trading or speculative purposes. The derivative liability at August 31, 2025 results from an option (the “Put Option”), which is embedded in the restricted common shares issued by the Company pursuant to the acquisition of TA Pipeline LLC (“TA”).
On August 6, 2025, the Company entered into a Membership Interest Purchase Agreement (the “TA MIPA”) with TA and the members of TA (the “TA Members”), pursuant to which the Company purchased all of the issued and outstanding membership interests of TA from the TA Members (the “TA Acquisition”), resulting in TA becoming a wholly owned subsidiary of the Company. The TA Acquisition closed on August 6, 2025 (the ‘Closing Date”).
Pursuant to the TA MIPA,
as consideration for the TA Acquisition, at closing, the Company (i) paid the TA Members an aggregate of $
In the event that the Fair Market Value of the Company’s common stock is less than $3.10 (the “Base Price”) during the three month period starting on the earlier of (1) the date on which the restricted shares of the Company’s common stock becomes eligible for public resale, and (2) the date that is twelve months after the Closing Date, each TA Member shall have the limited, one time option to exercise one of the following rights as to some or all of their outstanding TA Closing Shares and TA Milestone Shares (together the “TA Acquisition Shares”), by delivering notice to the Company: (i) the right to require the Company to repurchase from the TA Member all or any portion of their outstanding TA Acquisition Shares at the Base Price; (ii) the right to require the Company to issue to such TA Member that number of additional shares of Company common stock (the “Top Up Shares”) as is necessary to make the aggregate value of the number of TA Acquisition Shares (based on the Fair Market Value) equal to the original aggregate value of the TA Acquisition Shares (based on the Base Price) for the number of TA Acquisition Shares specified in the exercise notice; and (iii) the right to require the Company to pay to such TA Member, in cash, an amount equal to the product of (x) the number of TA Acquisition Shares specified in the exercise notice and (y) the positive difference, if any, between the Base Price and the Fair Market Value.
| 10 |
Pursuant to ASC 815, management evaluated the Put Option embedded in the common shares and determined that such Put Option required bifurcation and will be accounted for as a derivative liability. The Put Option applicable to the TA Acquisition Shares will be marked to market at each reporting period.
TA Milestone Payment
In
addition to the TA Closing Consideration, and as further consideration for the TA Acquisition,
The fair values of the Put Option and the TA Milestone Payment measured on a recurring basis are as follows:
Schedule of Fair Values of the Put Option and the TA Milestone Payment Measured On a Recurring Basis
| August 31, 2025 | Date of Issuance – August 6, 2025 |
||||||||||||
| Fair Value | Input Level | Fair Value | Input Level | ||||||||||
| Derivative liability – Put Option | $ | Level 3 | $ | Level 3 | |||||||||
| Contingent Consideration – TA Milestone Payment | $ | Level 3 | $ | Level 3 | |||||||||
The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable input (Level 3):
Schedule of Derivative Liability Measured at Fair Value On a Recurring Basis
| Put Option | TA Milestone Payment | |||||||
| Fair Value on Issuance Date | $ | $ | ||||||
| Change in fair value | $ | ( | ) | |||||
| Fair value on August 31, 2025 | $ | $ | ||||||
Investments in Equity Method Investees
The Company holds investments in certain entities that are accounted for under the equity method of accounting, as well as investments that are accounted for under the fair value method pursuant to ASC 321, “Investments - Equity Securities.” Under the equity method, investments in entities in which the Company has significant influence, but not control, are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the investees’ earnings or losses and other comprehensive income.
The Company determines the existence of significant influence based on various factors, including representation on the investees’ board of directors, participation in policy-making processes, and material intercompany transactions.
The Company’s equity method investments are evaluated periodically for impairment by assessing whether events or changes in circumstances indicate that the carrying value of the investment may not be recoverable. When such indicators exist, the Company performs an impairment test and recognizes an impairment loss to the extent that the carrying amount of the investment exceeds its fair value.
Distributions received from equity method investees that exceed cumulative earnings recognized by the Company are considered a return of investment and are recorded as a reduction in the carrying amount of the investment.
Adjustments resulting from changes in the Company’s ownership interest in equity method investees that do not result in a loss of significant influence are accounted for prospectively.
| 11 |
Basis Difference
In accordance with ASC 323, “Investments - Equity Method and Joint Ventures,” the Company records a basis difference when the carrying value of its equity method investment differs from its share of the investee’s fair value of net assets at the acquisition date. This basis difference is allocated to the investee’s identifiable assets and liabilities based on their fair values. The amortization of any basis difference related to depreciable assets, such as property, plant, and equipment, is recognized in the Company’s share of the investee’s earnings or losses. Any basis difference related to non-depreciable assets, including goodwill, is generally not amortized, but is subject to impairment testing as necessary.
The Company assesses the impact of any basis differences on its earnings and the carrying value of its equity method investments. If a basis difference is determined to exist, the appropriate adjustments are made to reflect the amortization of such differences in the consolidated financial statements.
Investments in Equity Securities without Readily Determinable Fair Value
In accordance with ASC 321-10-35-2, the Company holds certain investments in equity securities in which the Company does not have significant influence or control, and for which fair value is not readily determinable. These investments are primarily accounted for at cost, less any impairment. The carrying amount is periodically evaluated for impairment, and if necessary, an impairment loss is recognized in the statement of operations. These investments are not adjusted for unrealized gains or losses unless an impairment is identified.
Equity in Earnings of Equity Method Investees
The Company’s share of earnings or losses from equity method investees is recognized in the consolidated statement of operations within “Equity in share of loss of equity method investees,” net of any related income taxes.
| August 31, | ||||||||
| 2025 | 2024 | |||||||
| Warrants | ||||||||
| Stock Options | ||||||||
| Preferred Stock | ||||||||
| Total Underlying Common Shares | ||||||||
Schedule of Amounts Used In Computing Loss Per Share and Effect On Net Loss and Weighted Average Number Of Shares
| Three Months Ended August 31, | Six Months Ended August 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Loss from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Preferred dividends | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss from continuing operations applicable to common stockholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain (loss) from discontinued operations applicable to common stockholders | ( | ) | ||||||||||||||
| Net loss applicable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | |||||
| Weighted average number of common shares outstanding used in loss per share during the period (denominator) | ||||||||||||||||
| 12 |
Dilutive
loss per share was not presented, as the Company’s outstanding common and preferred warrants, stock options and preferred stock
common equivalent shares for the periods presented would have had an anti-dilutive effect. At August 31, 2025, the Company had outstanding
warrants to purchase
Accounting Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated by management. Significant accounting estimates that may materially change in the near future are impairment of long-lived assets, values of stock compensation awards and stock equivalents granted as offering costs, and allowance for bad debts.
Revenue Recognition – The Company’s revenue is derived primarily from sales of our software and related hardware suite under perpetual licenses and from providing engineering services under contracts. 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 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 recognizes revenue when the customer has purchased the product, the occurrence of the earlier of date of travel and the date of cancellation has expired, as satisfaction of the performance obligation, the sales price is fixed or determinable and collectability is reasonably assured. Revenue for customer travel packages purchased directly from the Company are recorded gross (the amount paid to the Company by the customer is shown as revenue and the cost of providing the respective travel package is recorded to cost of revenues).
The Company generates revenues from sales directly to customers as well as through other distribution channels of tours and activities at destinations throughout the world.
The Company controls the specified travel product before it is transferred to the customer and is therefore a principal, based on but not limited to, the following:
| ● | The Company is primarily responsible for fulfilling the promise to provide such travel product. | |
| ● | The Company has inventory risk before the specified travel product has been transferred to a customer or after transfer of control to a customer. | |
| ● | The Company has discretion in establishing the price for the specified travel product. |
| 13 |
Payments for tours or activities received in advance of services being rendered are recorded as deferred revenue and recognized as revenue at the earlier of the date of travel or the last date of cancellation (i.e., the customer’s refund privileges lapse).
Segment Reporting - We manage the Company as one reportable segment, Travel Products and Services. Travel bookings are the source of our revenues and include the sale of travel products such as airline tickets and hotel rooms as well as travel services such as travel insurance and ground activities. The segment information aligns with how the Company’s Chief Operating Decision Maker (“CODM”) reviews and manages our business. The Company’s CODM is the Company’s Chief Executive Officer.
Financial information and annual operating plans and forecasts are prepared and are reviewed by the CODM at a consolidated level. The CODM assesses performance for the Travel Products and Services segment and decides how to allocate resources based on revenue and net income that is reported on the Consolidated Statements of Operations. The Company’s objective in making resource allocation decisions is to optimize the financial results. The accounting policies of our Travel Products and Services segment are the same as those described in the summary of significant accounting policies herein.
For our single reportable segment-level financial information, total assets, and significant non-cash transactions, see the Financial Statements.
NOTE 3 - Investment in Equity Securities
Investment in Blue Fysh Holdings Inc.
On February 24, 2025, the Company entered into a Share Exchange Agreement with Blue Fysh Holdings Inc. (“Blue Fysh”), under which the Company acquired a % ownership interest in Blue Fysh. As part of the transaction, the Company issued shares of Series N Preferred at an issuance price of $ per share, totaling $, in exchange for restricted shares of Blue Fysh common stock. The transaction closed on February 28, 2025.
The Company’s investment in Blue Fysh is accounted for under the cost method, as the Company does not have significant influence over Blue Fysh. No board appointments are contemplated as part of this transaction; however, the Company has the right to appoint a representative to the Blue Fysh Advisory Committee, which will allow the Company to receive financial updates as needed and to be informed of financial events that could significantly impact the Company’s ownership position.
Since the Company’s ownership interest does not meet the criteria for significant influence pursuant to ASC 323, this investment is classified as an equity security without a readily determinable fair value and is initially recorded at cost. The Company will assess the investment for impairment in future periods and recognize any impairment losses as necessary.
Note 4 – Acquisition of FSA Travel, LLC
On
February 6, 2025, the Company acquired a
On
April 9, 2025, the Company exercised its option to purchase the remaining
The contingent consideration issued as purchase consideration provides for additional distributions to the FSA Unitholders, the amount of which is dependent on the acquired business’ achievement of certain milestones. The Company determined the fair value of the contingent consideration as of the acquisition date (April 9, 2025) based on the probability and timing of achieving the respective milestones.
| 14 |
Upon
completion of the acquisition of the remaining
The Company has completed a preliminary analysis to assign fair values to all assets acquired and liabilities assumed. The table below sets forth the consideration paid and the fair value of the assets acquired and liabilities assumed for the acquisition:
Schedule of Preliminary Analysis To Assign Fair Values To All Assets Acquired And Liabilities Assumed
| Consideration paid | ||||
| Cash | $ | |||
| Series O Preferred stock | ||||
| Earnout Payment | ||||
| Fair value of Initial Purchase | ||||
| Total consideration | $ | |||
| Assets acquired and liabilities assumed | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivable | ||||
| Intangibles | ||||
| Goodwill | ||||
| Total assets | $ | |||
| Accounts payable | ||||
| Due to FSA Unitholders | ||||
| SBA Loan | ||||
| Total liabilities | $ | |||
| Total net assets | $ |
The fair value of the working capital items, including accounts receivable, other receivables, trade payables and deferred revenue, approximates their respective carrying values at the date in which control was obtained. Effective January 1, 2021, the Company has adopted ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which created an exception to the recognition and measurement principles of ASC 805, Business Combinations, for the Company’s contract assets and liabilities, including deferred revenue, essentially resulting in the carryover of the historical amounts determined in accordance with ASC 606, Revenue from Contracts with Customers, rather than fair value.
The fair value of the acquired tradename and acquired technology was determined using the relief from royalty method, which utilized projected financial information. The goodwill recognized in the acquisition primarily represents synergies with the existing operations of the Company, and the value of yet-to-be-acquired/developed customers, technology, assembled workforce, and any other assets.
The Company is currently finalizing its valuation of the acquired assets and liabilities and has recorded these preliminary amounts as of the acquisition date. The final purchase price allocation may result in adjustments to the amounts presented.
| 15 |
NOTE 5 – Journy.tv Asset Acquisition
On April 1, 2025, the Company entered into an asset purchase agreement (the “Journy.tv Purchase Agreement”) with Ovation LLC (“Ovation”), pursuant to which the Company purchased assets, including without limitation trademarks, domains, apps and certain agreements, and assumed certain liabilities related to Ovation’s Journy.tv business (the “Journy.tv Acquisition”). The Journy.tv Acquisition closed on April 1, 2025.
Pursuant
to the Journy.tv Purchase Agreement, as consideration for the Journy.tv Acquisition, the Company paid Ovation $
In
connection with the Journy.tv Acquisition, on April 1, 2025, the Company and Ovation also entered into a License Agreement (the “License
Agreement”), pursuant to which Ovation granted the Company the non-exclusive right, throughout the territories and for the term
set forth therein, to exhibit, promote, market, advertise, publicize and/or otherwise exploit the programs listed in the License Agreement
in the media of (i) FAST via the Journy.tv Channel and (ii) Video On Demand via the Journy.tv Channel. Pursuant to the License Agreement,
Ovation shall not license any unaffiliated third party the right to exhibit certain of the programs subject to the License Agreement
and shall not use certain of the programs subject to the License Agreement on its owned or operating streaming platforms (subject to
certain exceptions). As consideration for the rights granted under the License Agreement, the Company agreed to pay Ovation an aggregate
non-refundable license fee of $
The transaction was accounted for as an asset acquisition because while inputs were acquired (in the form of trademarks, distribution agreements, content licenses, and service agreements), there is not a continuation of revenues before and after the transaction. That is, due to the significant rebranding and redevelopment of the inputs acquired, the Journy.tv assets are not producing revenue post-closing of the transaction. Additionally, an organized workforce with the necessary skills and experience to create outputs was not included in the transaction. As such, the transaction does not meet the definition of a business and is considered an asset acquisition.
On
the acquisition date, the fair value of the intangible assets acquired was $
NOTE 6 – Acquisition of TA Pipeline LLC
On August 6, 2025 (the “Closing Date”), the Company entered into the TA MIPA with TA and the TA Members, pursuant to which the Company purchased all of the issued and outstanding membership interests of TA from the TA Members (the “TA Acquisition”), resulting in TA becoming a wholly-owned subsidiary of the Company.
Pursuant
to the TA MIPA, as consideration for the TA Acquisition, at closing, the Company (i) paid the TA Members an aggregate of $
| 16 |
In addition to the foregoing, in the event that the Fair Market Value of the Company’s common stock is less than $ (the “Base Price”) during the applicable Exercise Period, each TA Member shall have the limited, one time option (the “Put Option”), to exercise one of the following rights as to some or all of their outstanding TA Acquisition Shares by delivering notice to the Company: (i) the right to require the Company to repurchase from the TA Member all or any portion of their outstanding TA Acquisition Shares at the Base Price; (ii) the right to require the Company to issue to such TA Member that number of additional shares of Company common stock (the “Top Up Shares”) as is necessary to make the aggregate value of the number of TA Acquisition Shares specified in the notice (based on the Fair Market Value) equal to the original aggregate value of the number of TA Acquisition Shares specified in the notice (based on the Base Price); and (iii) the right to require the Company to pay to such TA Member, in cash, an amount equal to the product of (x) the number of TA Acquisition Shares specified in the notice and (y) the positive difference, if any, between the Base Price and the Fair Market Value. For purpose of the foregoing rights, the “Exercise Period” means the three month period commencing upon the earlier of: (i) with respect to the TA Closing Shares, (x) the date that the TA Closing Shares first become eligible for public resale and (y) the first anniversary of the closing date; and (ii) with respect to the TA Milestone Shares, (x) the date that the TA Milestone Shares first become eligible for public resale and (y) the first anniversary of the closing date. Additionally, for purpose of the foregoing rights, “Fair Market Value” means the volume weighted average price per share of the Company’s common stock for the twenty consecutive trading days immediately preceding the notice date. During the Exercise Period, each of the TA Members shall be prohibited from engaging in certain transactions in the Company’s stock, as more particularly set forth in the TA MIPA. The fair value of the Put Option was determined using the Black Scholes Pricing Model and will be marked to market at each reporting date.
In
accordance with the acquisition method of accounting, the purchase price has been assigned to the assets acquired, and the liabilities
assumed, based on their estimated fair value at the acquisition date. In connection with the acquisition, the Company incurred $
Schedule of Preliminary Analysis To Assign Fair Values To All Assets Acquired And Liabilities Assumed
| Consideration paid | ||||
| Cash | $ | |||
| Common stock | ||||
| Fair value of TA Milestone Payment | ||||
| Fair value of derivative liability | ||||
| Total consideration | $ | |||
| Assets acquired and liabilities assumed | ||||
| Cash and cash equivalents | $ | |||
| Intangibles | ||||
| Goodwill | ||||
| Total assets | $ | |||
| Deferred merchant bookings | ||||
| Total liabilities | $ | |||
| Total net assets | $ |
The fair value of the working capital items, including cash and deferred merchant bookings, approximates their respective carrying values at the date on which control was obtained.
The fair value of the acquired tradename, acquired supplier agreements, and acquired travel agency agreements were determined using the relief from royalty method, with or without method and multi-period excess earnings method, respectively, which utilized projected financial information. The goodwill recognized in the acquisition primarily represents synergies with the existing operations of the Company, and the value of yet-to-be-acquired/developed customers, technology, assembled workforce, and any other assets.
| 17 |
The Company is currently finalizing its valuation of the acquired assets and liabilities and has recorded these preliminary amounts as of the acquisition date. The final purchase price allocation may result in adjustments to the amounts presented.
NOTE 7 – Intangible Assets
Intangible assets as of August 31, 2025, and February 28, 2025 consisted of the following:
Schedule of Intangible Assets
| August 31, 2025 | February 28, 2025 | |||||||
| Software Development | $ | $ | ||||||
| Software Licenses | ||||||||
| Trademark | ||||||||
| FSA Travel, LLC Tradename | ||||||||
| TA Pipeline, LLC Tradename | ||||||||
| TA Pipeline, LLC Supplier and Agency Agreements | ||||||||
| Journy.tv – Trade Name | ||||||||
| Journy.tv Distribution Agreements | ||||||||
| Total | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net of amortization | $ | $ | ||||||
Amortization
expense for the six months ended August 31, 2025, and 2024 was $
During the three and six months ended August 31, 2025, and 2024, the Company recorded no impairment losses associated with the carrying value exceeding its recoverable amount.
The estimated aggregate amortization expense for each of the succeeding years ending February 28 is as follows:
Schedule of estimated aggregate amortization expense
| 2026 (Remaining) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| $ |
NOTE 8 – Goodwill
Reverse Acquisition of Sigma Additive Solutions, Inc.
As discussed in Note 1 – Business Description and Going Concern, the legal acquisition of NTH by the Company on December 29, 2023 was determined to be a reverse acquisition, with NTH as the accounting acquirer, using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under this method of accounting, the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of consummation of the transaction.
Pursuant
to ASC 350-20, the Company assigned its goodwill to reporting units and is required to test each reporting unit’s goodwill for
impairment at least on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than
not reduce the fair value of a reporting unit below its carrying amount. The goodwill resulting from the reverse acquisition is primarily
attributable to NTH’s objective to obtain access to public markets to provide funding wherewithal to fund business growth. NTH’s
benefit in paying for these synergies in the reverse acquisition transaction was to avoid the time and expense of organizing and executing
an Initial Public Offering transaction. In the reverse acquisition, $
| 18 |
Acquisition of FSA Travel, LLC
As
of August 31, 2025, preliminary goodwill of $
Acquisition of TA Pipeline LLC
As
of August 31, 2025, preliminary goodwill of $
NOTE 9 – Notes Payable
Prior
to his appointment as a director, on May 24, 2024, the Company sold a short-term promissory note to Steve Kircher in the aggregate principal
amount of $
Prior
to her appointment as a director, on June 26, 2024, the Company sold a short-term promissory note to Carmen Diges in the aggregate principal
amount of $
On
November 8, 2024, the Company sold a short-term promissory note to 1800 Diagonal Lending LLC in the aggregate principal amount
of $
On
December 31, 2024, the Company sold a short-term promissory note to a private investor in the aggregate principal amount of $
On
February 4, 2025, the Company sold a short-term promissory note to 1800 Diagonal Lending LLC in the aggregate principal amount of $
| 19 |
On
August 20, 2025, the Company entered into a securities purchase agreement (the “Note & Warrant SPA”) with Alumni Capital
LP (“Alumni Capital”) for the sale of a short-term promissory note (the “Alumni Note”) and warrants (“Warrants”)
to Alumni Capital for total consideration of $
The
Alumni Note is in the principal amount of $
As
of August 31, 2025, the balance on the Alumni Note, net of the unamortized debt discount, was $
NOTE 10 – Long-Term Debt
As
part of the acquisition of FSA on April 9, 2025, the Company assumed an SBA loan originally issued to FSA on December 4, 2020, with an
initial principal amount of $
In
accordance with ASC 805 – Business Combinations, the assumed loan was recognized at its acquisition-date fair value of $
The loan is measured at amortized cost subsequent to the acquisition date, and interest expense is recognized using the effective interest method based on the fair value of the liability at the acquisition date. The following table summarizes the loan terms as of the acquisition date:
Schedule of Long Term Loan
| Description | Amount | |||
| Principal amount | $ | |||
| Fair value at acquisition date | $ | |||
| Remaining term | ||||
| Monthly payment | $ | |||
| Effective interest rate | % | |||
As
of August 31, 2025, the balance of the loan was $
NOTE 11 - Related Party Transactions
On
April 9, 2025, NTH and the Donald P. Monaco Insurance Trust (the “Trust”) entered into two promissory notes (together, the
“Trust Notes”) under the Company’s $
On
May 6, 2025, the Company entered into a Line of Credit Agreement (the “MIP Line of Credit”) with Monaco Investment Partners
II, LP (“MIP”) providing the Company with a $
| 20 |
The
total amounts due to related parties at August 31, 2025 and February 28, 2025 totaled $
NOTE 12 - Stockholders’ Equity
Mezzanine Equity
In connection with the acquisition of TA Pipeline LLC on August 6, 2025, the Company issued TA Closing Shares. Although the shares are legally common stock, they are classified as mezzanine equity on the consolidated balance sheet due to contingent redemption rights resulting from derivative liability provisions that could require cash or share settlement outside the Company’s control.
Accordingly, these shares are presented outside of permanent stockholders’ equity and below total liabilities. The Company will continue to classify the shares as mezzanine equity until such time as the redemption provisions lapse or are removed, or until settlement occurs.
The
carrying amount of instruments recorded within mezzanine equity are not adjusted below initial measurement. The TA Acquisition Shares
were initially recorded at $ per share, which was the closing prices of our stock on the acquisition date. The Put Option has an
exercise price of $
For further information regarding the TA Closing Shares and TA Acquisition shares, refer to Notes 2 and 6.
Common Stock
The Company has shares of common stock authorized for issuance pursuant to its amended and restated articles of incorporation, as amended (“Charter”). At August 31, 2025 and February 28, 2025, there were and shares of common stock, par value $ $ per share, issued and outstanding, respectively. All shares of common stock have equal voting rights, are fully-paid and non-assessable, and are entitled to one vote per share.
During the first quarter of 2025, the Company issued shares of common stock in connection with various investor relations consulting contracts, shares of common stock to the holders of shares of the Company’s Series L and Series M Preferred stock as dividends, shares of common stock to Ovation as partial consideration pursuant to the April 1, 2025 Journy.tv Asset Purchase Agreement; shares of common stock to ITA as a finder’s fee related to the FSA acquisition; shares of common stock pursuant to a consulting contract related to the development and launch of a dedicated beauty and wellness FAST channel; and shares of common stock to the members of NTG pursuant to the Exchange Agreement, constituting Contingent Shares issuable to the members of NTG upon the achievement of all business milestones.
In the second quarter of 2025, the Company issued shares of common stock in connection with various investor relations consulting contracts, shares of common stock to the holders of shares of the Company’s Series L and Series M Preferred stock as dividends, shares of common stock to TA Pipeline as partial consideration pursuant to the August 6, 2025 Membership Interest Purchase Agreement; shares of common stock to various vendors as settlement for outstanding invoices; and shares issued to investors in private placements.
Preferred Stock
Under our Charter, our board of directors has the authority, without further action by stockholders, to designate one or more series of preferred stock and to fix the voting powers, designations, preferences, limitations, restrictions and relative rights granted to or imposed upon the preferred stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference and sinking fund terms, any or all of which may be preferential to or greater than the rights of the common stock.
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Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock.
The Company is authorized to issue shares of preferred stock, par value $ per share. An aggregate of and shares of preferred stock were issued and outstanding at August 31, 2025 and February 28, 2025, respectively, as further discussed below.
Series E Convertible Preferred Stock
Under
the Certificate of Designations of the Series E Preferred Stock, shares of the Company’s Series E Preferred have an initial stated
value of $ per share (the “Series E Stated Value”). Dividends at the initial rate of
At August 31, 2025, shares of Series E Preferred were outstanding, which if converted as of August 31, 2025, including the make-whole dividends, would have resulted in the issuance of shares of common stock.
Series F Convertible Preferred Stock
On January 4, 2024, the Company filed a Certificate of Designation of Series F Convertible Preferred Stock (the “Series F Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series F Preferred. The Series F Preferred was designated by the Company in connection with the acquisition of NTH, and, in the event that the Company did not have sufficient shares of common stock available to fulfill its obligations pursuant to the Exchange Agreement governing the terms of the acquisition, shares of Series F Preferred would have been issued to the previous equity holders of NTH in lieu of shares of Company common stock.
The terms and conditions set forth in the Series F Certificate of Designation are summarized below:
Ranking. The Series F Preferred rank pari passu to the Company’s common stock.
Dividends. Holders of Series F Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.
Voting. Except as provided by the Company’s Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series F Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series F Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series F Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series F Preferred or alter or amend the Series F Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series F Preferred, or (c) enter into any agreement with respect to the foregoing.
| 22 |
Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding Series F Preferred, each outstanding share of Series F Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series F Conversion Ratio”).
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary (each, a “Liquidation”), holders of Series F Preferred will be entitled to participate, on an as-converted-to-common stock basis calculate based on the Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
At August 31, 2025, shares of the Series F Preferred were outstanding.
Series G Convertible Preferred Stock
On January 26, 2024, the Company filed a Certificate of Designation of Series G Convertible Preferred Stock (the “Series G Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series G Preferred, par value $ per share.
The terms and conditions set forth in the Series G Certificate of Designation are summarized below:
Ranking. The Series G Preferred rank pari passu to the Company’s common stock.
Dividends. Holders of Series G Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.
Voting. Except as provided by the Company’s Charter or as otherwise required by the Nevada Revised Statutes, holders of Series G Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series G Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series G Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series G Preferred or alter or amend the Series G Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series G Preferred, or (c) enter into any agreement with respect to the foregoing.
Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding Series G Preferred, each outstanding share of Series G Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series G Conversion Ratio”).
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series G Preferred will be entitled to participate, on an as-converted-to-common stock basis calculate based on the Series G Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
Redemption
Right.
The Company did not exercise its option to repurchase 50% of the Series G Preferred, and all such shares were converted into shares of Company common stock on March 15, 2024. At August 31, 2025, shares of Series G Preferred were outstanding.
Series H Convertible Preferred Stock
On January 26, 2024, the Company filed a Certificate of Designation of Series H Convertible Preferred Stock (the “Series H Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series H Preferred, par value $ per share.
| 23 |
The terms and conditions set forth in the Series H Certificate of Designation are summarized below:
Ranking. The Series H Preferred rank pari passu to the Company’s common stock.
Dividends. Holders of Series H Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.
Voting. Except as provided by the Company’s Charter or as otherwise required by the Nevada Revised Statutes, holders of Series H Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series H Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series H Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series H Preferred or alter or amend the Series H Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series H Preferred, or (c) enter into any agreement with respect to the foregoing.
Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding Series H Preferred, each outstanding share of Series H Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series H Conversion Ratio”).
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series H Preferred will be entitled to participate, on an as-converted-to-common stock basis calculate based on the Series H Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
At August 31, 2025, shares of Series H Preferred were outstanding, which if converted as of August 31, 2025, would have resulted in the issuance of shares of common stock.
Series I Convertible Preferred Stock
On February 22, 2024, the Company filed a Certificate of Designation of Series I Convertible Preferred Stock (the “Initial Series I Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series I Preferred, par value $ per share. On February 25, 2025, the Company filed an amendment to the Initial Series I Certificate of Designation (the “Amendment to Series I Certificate of Designation” and together with the Initial Series I Certificate of Designation, the “Series I Certificate of Designation”) with the Secretary of State of the State of Nevada, to increase the number of shares of Series I Preferred to shares.
The terms and conditions set forth in the Series I Certificate of Designation are summarized below:
Ranking. The Series I Preferred rank pari passu to the Company’s common stock.
Dividends. Holders of Series I Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.
Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series I Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series I Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series I Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series I Preferred or alter or amend the Series I Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series I Preferred, or (c) enter into any agreement with respect to the foregoing.
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Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding shares of Series I Preferred, each outstanding share of Series I Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series I Conversion Ratio”).
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series I Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series I Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
On
August 15, 2024, the Company entered into a securities purchase agreement with an investor for the sale of shares of Series I Preferred,
at $ per share, resulting in gross proceeds to the Company of $
On
August 31, 2024, the Company entered into a securities purchase agreement with an investor for the sale of shares of Series I
Preferred at $ per share, resulting in gross proceeds to the Company of $
On
October 1, 2024, the Company entered into a securities purchase agreement with an investor for the sale of shares of Series I
Preferred at $ per share, resulting in gross proceeds to the Company of $
On
February 24, 2025, the Company entered into a securities purchase agreement (the “Series I Purchase Agreement”) with certain
accredited investors, pursuant to which the Company issued and sold an aggregate of restricted shares of Series I Preferred to
the purchasers at a purchase price of $ per share (the “Series I Offering”), resulting in aggregate gross proceeds to
the Company of $
On
February 24 2025, the Company entered into a debt conversion agreement with Greg Miller, an independent contractor of the Company, whereby
Mr. Miller and the Company agreed to convert $
On February 25, 2025, the Company issued shares of Series I Preferred at $ per share to the Company’s IT contractor as payment for outstanding invoices.
The Series I Preferred shall not be convertible and the Miller Warrant shall not be exercisable into shares of common stock until such date that the Company obtains stockholder approval to remove the Exchange Cap (as described below).
At August 31, 2025, shares of Series I Preferred were outstanding, which if converted as of August 31, 2025, would have resulted in the issuance of shares of common stock.
Series J Nonvoting Convertible Preferred Stock
On January 3, 2025, the Company filed a Certificate of Designation of Series J Nonvoting Convertible Preferred Stock (the “Series J Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series J Preferred, par value $ per share.
The terms and conditions set forth in the Series J Certificate of Designation are summarized below:
Ranking. The Series J Preferred rank pari passu to the Company’s common stock.
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Dividends. Holders of Series J Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.
Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series J Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series J Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series J Preferred or alter or amend the Series J Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series J Preferred, or (c) enter into any agreement with respect to the foregoing.
Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series J Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series J Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series J Conversion Ratio”), subject to beneficial ownership limitations.
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series J Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series J Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
On
December 31, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the
Company issued and sold an aggregate of restricted shares of Series J Preferred, at a purchase price of $ per share, resulting
in gross proceeds to the Company of $
The Series J Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.
At August 31, 2025, shares of Series J Preferred were outstanding, which if converted as of August 31, 2025, would have resulted in the issuance of shares of common stock.
Series K Nonvoting Convertible Preferred Stock
On January 3, 2025, the Company filed a Certificate of Designation of Series K Nonvoting Convertible Preferred Stock (the “Series K Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series K Preferred, par value $ per share.
The terms and conditions set forth in the Series K Certificate of Designation are summarized below:
Ranking. The Series K Preferred rank pari passu to the Company’s common stock.
Dividends. Holders of Series K Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.
Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series K Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series K Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series K Preferred or alter or amend the Series K Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series K Preferred, or (c) enter into any agreement with respect to the foregoing.
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Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series K Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series K Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series K Conversion Ratio”), subject to beneficial ownership limitations.
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series K Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series K Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
On
December 31, 2024, the Company issued an aggregate of shares of Series K Preferred to a series of investors at a price of $
per share as prepaid guaranteed interest in connection with the sale of an aggregate of $
The Series K Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.
At August 31, 2025, shares of the Series K Preferred were outstanding, which if converted as of August 31, 2025, would have resulted in the issuance of shares of common stock.
Series L Nonvoting Convertible Preferred Stock
On January 3, 2025, the Company filed a Certificate of Designation of Series L Nonvoting Convertible Preferred Stock (the “Initial Series L Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series L Preferred, par value $ per share. On February 25, 2025, the Company filed an amendment to the Initial Series L Certificate of Designation (the “Series L Preferred Amendment,” and together with the Initial Series L Certificate of Designation, the “Series L Certificate of Designation”) with the Secretary of State of the State of Nevada, to increase the number of shares of the Company’s preferred stock designated as Series L Preferred to shares.
The terms and conditions set forth in the Series L Certificate of Designation are summarized below:
Ranking. The Series L Preferred rank pari passu to the Company’s common stock.
Dividends.
Holders of Series L Preferred will be entitled to dividends, if, as and when declared by the Board out of funds at the time legally
available therefor, dividends in the amount of
Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series L Preferred are not entitled to voting rights However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series L Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series L Preferred or alter or amend the Series L Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series L Preferred, or (c) enter into any agreement with respect to the foregoing.
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Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series L Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series L Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series L Conversion Ratio”), subject to beneficial ownership limitations.
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series L Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series L Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
On
December 31, 2024, the Company entered into debt conversion agreements with its chief executive officer, William Kerby, and chairman
of the board, Donald P. Monaco (the “Related Parties”), whereby the Related Parties and the Company agreed to convert $
On
February 24, 2025, the Company entered into debt conversion agreements with its chief executive officer, William Kerby, and chairman
of the board, Donald P. Monaco, whereby the Related Parties and the Company agreed to convert $
The Series L Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap, subject to beneficial ownership limitations.
At August 31, 2025, shares of the Series L Preferred were outstanding, which if converted as of August 31, 2025, would have resulted in the issuance of shares of common stock.
Series M Nonvoting Convertible Preferred Stock
On January 3, 2025, the Company filed a Certificate of Designation of Series M Nonvoting Convertible Preferred Stock (the “Series M Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series M Preferred, par value $ per share.
The terms and conditions set forth in the Series M Certificate of Designation are summarized below:
Ranking. The Series M Preferred rank pari passu to the Company’s common stock.
Dividends.
Holders of Series M Preferred will be entitled to dividends, if, as and when declared by the Board out of funds at the time legally
available therefor, dividends in the amount of
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Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series M Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series M Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series M Preferred or alter or amend the Series M Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series M Preferred, or (c) enter into any agreement with respect to the foregoing.
Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series M Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series M Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series M Conversion Ratio”), subject to beneficial ownership limitations.
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series M Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series M Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
On December 31, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company may issue and sell up to $ of restricted shares of Series M Preferred, at a purchase price of $ per share.
In
addition, as part of the Series M Preferred offering, on December 31, 2024, the Company entered into a debt conversion agreement with
an existing lender whereby the lender and the Company agreed to convert $
The Series M Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.
On December 31, 2024, in connection with the foregoing, the Company issued shares of Series M Preferred to an investor pursuant to a debt conversion agreement.
At August 31, 2025, all shares of the Series M Preferred were outstanding, which if converted as of August 31, 2025, would have resulted in the issuance of shares of common stock.
Series N Nonvoting Convertible Preferred Stock
On January 30, 2025, the Company filed a Certificate of Designation of Series N Convertible Preferred Stock (the “Series N Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series N Preferred, par value $ per share.
The terms and conditions set forth in the Series N Certificate of Designation are summarized below:
Ranking. The Series N Preferred rank pari passu to the Company’s common stock.
Dividends. Holders of Series N Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.
Voting. Except as provided by the Series N Certificate of Designation, or as otherwise required by the Nevada Revised Statutes, holders of Series N Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series N Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series N Preferred or alter or amend the Series N Certificate of Designation, (ii) amend its Charter, amended and restated bylaws or other charter documents in any manner that adversely effects any rights of the holders of the Series N Preferred, or (c) enter into any agreement with respect to the foregoing.
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Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series N Preferred into shares of common stock in accordance with the listing rules of Nasdaq, each outstanding share of Series N Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series N Conversion Ratio”), subject to beneficial ownership limitations.
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series N Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series N Conversion Ratio (as defined in the Series N Certificate of Designation), with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
On
January 28, 2025, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company
issued and sold the purchaser (i) restricted shares of Series N Preferred and (ii) warrants to purchase
On February 24, 2025, the Company and Blue Fysh entered into a Share Exchange Agreement whereby Blue Fysh agreed to issue restricted shares of its common stock to the Company, representing a % interest in Blue Fysh, in exchange for restricted shares of Series N Preferred at an issuance price of $ per share (the “BF Share Exchange”). The BF Share Exchange closed on February 28, 2025.
The Series N Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.
At August 31, 2025, shares of the Series N Preferred were outstanding, which if converted as of August 31, 2025, would have resulted in the issuance of shares of common stock.
Series O Nonvoting Convertible Preferred Stock
On February 6, 2025, the Company filed a Certificate of Designation of Series O Nonvoting Convertible Preferred Stock (the “Series O Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series O Preferred, par value $ per share.
The terms and conditions set forth in the Series O Certificate of Designation are summarized below:
Ranking. The Series O Preferred rank pari passu to the Company’s common stock.
Dividends. Holders of Series O Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.
Voting. Except as provided by the Series O Certificate of Designation, or as otherwise required by the Nevada Revised Statutes, holders of Series O Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series O Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series O Preferred or alter or amend the Series O Certificate of Designation, (ii) amend its Charter, amended and restated bylaws or other charter documents in any manner that adversely effects any rights of the holders of the Series O Preferred, or (c) enter into any agreement with respect to the foregoing.
Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series O Preferred into shares of common stock in accordance with the listing rules of Nasdaq, each outstanding share of Series O Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series O Conversion Ratio”), subject to beneficial ownership limitations.
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series O Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series O Conversion Ratio (as defined in the Series O Certificate of Designation), with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
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On
February 6, 2025, in connection with the Company’s acquisition of the initial
On
April 9, 2025, in connection with the Company’s acquisition of the remaining
On April 28, 2025, in connection with achievement of all business milestones, the Company issued shares of Series O Preferred stock to FSA.
The shares of Series O Preferred issued cannot be converted into shares of Company common stock unless and until the Company’s stockholders approve the conversion of Series O Preferred into shares of common stock in accordance with the listing rules of Nasdaq. Upon receipt of such approval, the shares of Series O Preferred outstanding as of such date shall automatically convert into shares of Company common stock, subject to applicable beneficial ownership limitations.
At August 31, 2025, shares of Series O Preferred were outstanding, which if converted as of August 31, 2025, would have resulted in the issuance of shares of common stock
Series P Nonvoting Convertible Preferred Stock
On February 25, 2025, the Company filed a Certificate of Designation of Series P Nonvoting Convertible Preferred Stock (the “Series P Certificate of Designation”) with the Secretary of State of the State of Nevada, designating shares of the Company’s preferred stock as Series P Preferred, par value $ per share.
The terms and conditions set forth in the Series P Certificate of Designation are summarized below:
Ranking. The Series P Preferred rank pari passu to the Company’s common stock.
Dividends. Holders of Series P Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.
Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series P Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series P Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series P Preferred or alter or amend the Series P Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series P Preferred, or (c) enter into any agreement with respect to the foregoing.
Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series P Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series P Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series P Conversion Ratio”), subject to beneficial ownership limitations.
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series P Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series P Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
On
February 26, 2025, the Company entered into an Equity Investment Agreement with AOS Holdings LLC (“AOS”), pursuant to which
the Company issued and sold to AOS (i) restricted shares of Series P Preferred, (ii) a warrant exercisable in cash to purchase
up to
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On
February 26, 2025, the Company entered into a Debt Exchange Agreement with AOS, whereby AOS and the Company agreed to convert $
The Series P Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap, subject to beneficial ownership limitations.
At August 31, 2025, shares of the Series P Preferred were outstanding, which if converted as of August 31, 2025, would have resulted in the issuance of shares of common stock.
Exchange Cap
Each of the Series J, K, L, M, N, O, and P Offerings includes conversion or exercise limitations which provide that the Company shall not issue or sell any shares of Common Stock pursuant to the conversions of preferred stock to the extent that after giving effect thereto, the aggregate number of shares of Common Stock that would be issued would exceed 19.99% of the shares of Common Stock outstanding on the date of each such Offering (which number of shares shall be reduced, on a share-for-share basis, by the number of shares of Common Stock issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by each such separate Offering under applicable rules of the Nasdaq Capital Market) (the “Exchange Cap”) unless and until the Company elects to solicit stockholder approval of the issuance of Common Stock as contemplated by the Purchase Agreements and the stockholders of the Company have in fact approved such issuance in accordance with the applicable rules and regulations of the Nasdaq Capital Market.
Stock Options
On December 28, 2023, at the Annual Meeting of Stockholders of the Company, the Company’s stockholders approved the adoption of the NextTrip 2023 Equity Incentive Plan (the “2023 Plan”). shares of common stock have been reserved for issuance under the 2023 Plan, and as of August 31, 2025, shares are available for future issuance.
The Company’s 2013 Equity Incentive Plan expired on March 15, 2023. As such, there were no shares of common stock reserved for future issuance thereunder as of August 31, 2025.
On March 26, 2025, under the terms of the 2013 Equity Incentive Plan, all outstanding options terminated upon the change in control effected by the issuance of Contingent Shares pursuant to the Exchange Agreement entered into in connection with the NextTrip Acquisition.
During the six months ended August 31, 2025, the Company granted and issued stock options to purchase an aggregate of 806,250 shares of common stock under the 2023 Plan. There were no issuances of options during the three months ended August 31, 2024.
The Company generally grants stock options to employees, consultants, and directors at exercise prices equal to the fair market value of the Company’s common stock on the grant date, but not less than 100% of the fair market value. Stock options are typically granted throughout the year and generally vest over a period from one to three years of service and expire five years from the grant date, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the vesting period for each stock option award.
Total stock-based compensation expense included in the statements of operations for the three months ended August 31, 2025 and 2024 was $ and $, for the six months ended August 31, 2025 and 2024 was $ and $ respectively, all of which is related to stock options.
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Schedule of Share Based Payments Award Stock Options Valuation Assumptions
| 2025 | ||||
| Dividend yield | % | |||
| Risk-free interest rate | %- | % | ||
| Expected volatility | .0%- | % | ||
| Expected life (in years) | ||||
Schedule of Stock Option Activity
| Options | Weighted Average Exercise Price ($) | Weighted Average Remaining Contractual Life (Yrs.) | Aggregate Intrinsic Value ($) | |||||||||||||
| Options outstanding at February 29, 2024 | ||||||||||||||||
| Exercised | - | |||||||||||||||
| Forfeited or cancelled | ( | ) | - | |||||||||||||
| Options outstanding at February 28, 2025 | ||||||||||||||||
| Granted | ||||||||||||||||
| Exercised | - | |||||||||||||||
| Forfeited or cancelled | ( | ) | - | |||||||||||||
| Options outstanding August 31, 2025 | ||||||||||||||||
| Options expected to vest in the future as of August 31, 2025 | - | |||||||||||||||
| Options exercisable at August 31, 2025 | ||||||||||||||||
| Options vested, exercisable, and options expected to vest at August 31, 2025 | ||||||||||||||||
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the market price of our common stock. At August 31, 2025, options had an exercise price below the $ closing price of our common stock as reported on The Nasdaq Capital Market.
At August 31, 2025, there was unrecognized stock-based compensation expense related to unvested stock options.
Stock Appreciation Rights
The purposes of the 2020 Stock Appreciation Rights Plan (the “2020 SAR Plan”) are to: (i) enable the Company to attract and retain the types of employees, consultants, and directors (collectively, “Service Providers”) who will contribute to the Company’s long-range success; (ii) provide incentives that align the interests of Service Providers with those of the stockholders of the Company; and (iii) promote the success of the Company’s business. The 2020 SAR Plan provides for incentive awards that are only in the form of stock appreciation rights payable in cash (“SARs”). No shares of common stock are reserved or will be issued pursuant to the 2020 SAR Plan.
SARs may be granted to any Service Provider. A SAR is the right to receive an amount equal to the Spread with respect to a share of the Company’s common stock (a “Share”) upon the exercise of the SAR. The “Spread” is the difference between the exercise price per share specified in a SAR agreement on the date of grant and the fair market value per share on the date of exercise of the SAR. The exercise price per share will not be less than 100% of the fair market value of a Share on the date of grant of the SAR. The administrator of the 2020 SAR Plan will have the authority to, among other things, prescribe the terms and conditions of each SAR, including, without limitation, the exercise price and vesting provisions, and to specify the provisions of the SAR Agreement relating to such grant.
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On March 26, 2025, under the terms of the 2020 SAR Plan, all outstanding unvested SARs became immediately vested and exercisable upon the change in control effected by the issuance of Contingent Shares pursuant to the Exchange Agreement entered into in connection with the NextTrip Acquisition.
The Company did not grant any SARs during the six months ended August 31, 2025 or August 31, 2024.
The Company recognizes compensation expense and a corresponding liability for the fair value of the SARs over the vesting period for each SAR award. The SARs are revalued at each reporting date in accordance with ASC 718 “Compensation-Stock Compensation,” and any changes in fair value are reflected in the Statement of Operations as of the applicable reporting date.
Schedule of Stock Option Activity
| SARs | Weighted Average Exercise Price ($) | Weighted Average Remaining Contractual Life (Yrs.) | Aggregate Intrinsic Value ($) | |||||||||||||
| SARs outstanding at February 29, 2024 | ||||||||||||||||
| Exercised | - | |||||||||||||||
| Forfeited or cancelled | ( | ) | - | |||||||||||||
| SARs outstanding at February 28, 2025 | ||||||||||||||||
| Granted | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Forfeited or cancelled | ( | ) | - | |||||||||||||
| SARs outstanding August 31, 2025 | ||||||||||||||||
| SARs expected to vest in the future as of August 31, 2025 | - | |||||||||||||||
| SARs exercisable at August 31, 2025 | ||||||||||||||||
| SARs vested, exercisable, and SARs expected to vest at August 31, 2025 | ||||||||||||||||
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the market price of our common stock. At August 31, 2025, no SARs had an exercise price below the $ closing price of our common stock as reported on The Nasdaq Capital Market.
At August 31, 2025, there was unrecognized stock-based compensation expense related to unvested SARs.
Warrants
Assumptions:
Schedule of Share Based Payments Award Stock Options Valuation Assumptions
| 2025 | ||||
| Dividend yield | % | |||
| Risk-free interest rate | %- | % | ||
| Expected volatility | %- | % | ||
| Expected life (in years) | ||||
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Warrant activity for the six months ended August 31, 2025 and the year ended February 28, 2025 was as follows:
Schedule of Warranty Activity
| Warrants | Weighted Average Exercise Price ($) | Weighted Average Remaining Contractual Life (Yrs.) | ||||||||||
| Warrants outstanding at February 29, 2024 | ||||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | - | |||||||||
| Forfeited or cancelled | ( | ) | - | |||||||||
| Warrants outstanding at February 28, 2025 | ||||||||||||
| Granted | ||||||||||||
| Exercised | - | |||||||||||
| Forfeited or cancelled | ( | ) | - | |||||||||
| Warrants outstanding at August 31, 2025 | ||||||||||||
NOTE 13 - Subsequent Events
The Company’s management has evaluated subsequent events after the balance sheet dated as of August 31, 2025 through October 15, 2025, the date of this report.
Related Party Transactions
Series Q Nonvoting Convertible Preferred Stock
On September 10, 2025, the Company entered into securities purchase agreements (each a “Series Q Purchase Agreement”) with Andy Kaplan and Jimmy Byrd, two of our independent directors, pursuant to which the Company issued and sold respectively, and restricted shares of newly designated Series Q Nonvoting Convertible Preferred Stock of the Company (the “Series Q Preferred”), (the “Series Q Offering”) at a purchase price of $ per share.
On
September 15, 2025, we entered into debt conversion agreements with Carmen Diges and Stephen Kircher, two of our independent directors,
whereby they agreed to convert existing unsecured promissory notes, including accrued interest, into shares of our Series Q Preferred
stock. Ms. Diges converted $
Notes Payable
On
September 26, 2025, the Company sold a short-term promissory note to 1800 Diagonal Lending LLC in the aggregate principal amount of $
Sale of Common Shares
On October 8, 2025, the Company entered into a securities
purchase agreement with Caesar Capital Group LLC, pursuant to which the Company issued and sold shares of common stock at a purchase
price of $ per share, resulting in total proceeds of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-looking statements
This Quarterly Report on Form 10-Q for the quarter ended August 31, 2025 (this “Quarterly Report”) contains “Forward-Looking Statements.” All statements other than statements of historical fact are “Forward-Looking Statements” including but not limited to, statements regarding our expectations about development and commercialization of our technology, any projections of revenues or statements regarding our anticipated revenues or other financial items, any statements of the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. All Forward-Looking Statements included in this Quarterly Report are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any Forward-Looking Statement. In some cases, Forward-Looking Statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “potential,” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the Forward-Looking Statements contained herein are reasonable, there can be no assurance that such expectations or any of the Forward-Looking Statements will prove to be correct, and actual results could differ materially from those projected or assumed in the Forward-Looking Statements. Future financial condition and results of operations, as well as any Forward-Looking Statements are subject to inherent risks and uncertainties, including factors referred to in our press releases and reports filed with the Securities and Exchange Commission (the “SEC”). All subsequent Forward-Looking Statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Additional factors that may have a direct bearing on our operating results are described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended February 28, 2025 and elsewhere in this Quarterly Report.
Corporation Information
Sigma Additive Solutions, Inc. (“Sigma”), the legal acquiror of NextTrip, was initially incorporated as Messidor Limited in Nevada on December 23, 1985, and changed its name to Framewaves Inc. in 2001. On September 27, 2010, the name was changed to Sigma Labs, Inc. On May 17, 2022, Sigma Labs, Inc. began doing business as Sigma Additive Solutions, and on August 9, 2022, changed its name to Sigma Additive Solutions, Inc.
On March 11, 2024, Sigma filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation, as amended to date, with the Secretary of State of the State of Nevada, pursuant to which, effective as of 12:01 a.m. Pacific time on March 13, 2024, among other things, Sigma’s corporate name was changed from Sigma Additive Solutions, Inc. to “NextTrip, Inc.”
Our principal executive offices are located at 3900 Paseo del Sol, Santa Fe, New Mexico 87507, and our telephone number is (954) 526-9688. Our website address is www.nexttrip.com. The Company’s annual reports, quarterly reports, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other information related to the Company, are available, free of charge, on our website. The Company’s website and the information contained therein, or connected thereto, are not and are not intended to be incorporated into this Quarterly Report.
The Company provides travel technology solutions with sales originating in the United States, with a primary emphasis on hotels, air, and all-inclusive travel packages. Our proprietary booking engine, branded as NextTrip 2.0, provides travel distributors access to a sizeable inventory.
The Company owns 50% of Next Innovation LLC, a Joint Venture (“Next Innovation”), which is dormant. No activities nor operations occurred through Next Innovation in fiscal years 2024 or 2025 for this entity, and the Company does not have control of Next Innovation and therefore no minority interest was recorded.
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Reverse Acquisition
On October 12, 2023, the Company (then known as Sigma) entered into a Share Exchange Agreement (the “Exchange Agreement”) with NextTrip Holdings, Inc. (“NTH”), NextTrip Group, LLC (“NTG”), and William Kerby (the “NTH Representative”), pursuant to which the Company acquired NTH (the “NextTrip Acquisition”) in exchange for shares of our common stock, which we refer to as the Exchange Shares. The NextTrip Acquisition was consummated on December 29, 2023. As a result, NTH became a wholly-owned subsidiary of the Company.
Upon the closing of the NextTrip Acquisition, the shareholders of NTG (collectively, the “NTG Sellers”), were issued a number of Exchange Shares equal to 19.99%, or 156,007 shares, of our issued and outstanding shares of common stock immediately prior to the closing. Under the Exchange Agreement, the NTG Sellers were entitled to receive additional shares of our common stock, referred to as the Contingent Shares, subject to NTH’s achievement of future business milestones (the “Milestone Events”) specified in the Exchange Agreement as follows:
| Milestone Event | Date Earned | Contingent Shares | Status as of the date of this Report | |||
| Launch of NTH’s leisure travel booking platform by either (i) achieving $1,000,000 in cumulative sales under its historical “phase 1” business, or (ii) commencement of its marketing program under its enhanced “phase 2” business. | As of a date six months after the closing date | 1,450,000 Contingent Shares | Achieved. Marketing program under “phase 2” has commenced. | |||
| Launch of NTH’s group travel booking platform and signing of at least five (5) entities to use the Groups Platform. | As of a date nine months from the closing date (or earlier date six months after the closing date) | 1,450,000 Contingent Shares | Achieved. Five groups have been contracted to use the Groups Platform. | |||
| Launch of NTH’s Travel Agent Platform and signing up of at least 100 travel agents to the platform (which calculation includes individual agents of an agency that signs up on behalf of multiple agents). | As of a date 12 months from the closing date (or earlier date six months after the closing date) | 1,450,000 Contingent Shares | Achieved. The company has signed up more than 175 travel agents to its Travel Agent Platform. | |||
| Commercial launch of PayDlay technology in the NXT2.0 system. | As of a date 15 months after the closing date (or earlier date six months after the closing date) | 1,650,000 Contingent Shares, less the Exchange Shares issued at the closing of the Acquisition | Achieved. PayDlay has been commercially launched. |
The Contingent Shares, together with the shares of our common stock issued at the closing, was not to exceed 6,000,000 shares of our common stock, or approximately 90.2% of our issued and outstanding shares of common stock immediately prior to closing.
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The Exchange Agreement provided that William Kerby, the Chief Executive Officer and co-founder of NTH, was appointed as Chief Executive Officer of the Company and Donald P. Monaco was appointed as a director of the Company as of the closing of the NextTrip Acquisition. Additionally, pursuant to the Exchange Agreement, the NTH Representative (Mr. Kerby) shall be entitled to designate a replacement for one additional director of the Company upon achievement of each of the milestones under the Exchange Agreement (the “Board Appointment Rights”).
In connection with the NextTrip Acquisition, the Company and Nasdaq determined that the issuance of Contingent Shares upon achievement of any one of the Milestone Events would result in a change in control of the Company under Nasdaq Listing Rule 5635(a). Pursuant to Nasdaq Listing Rule 5110(a), the Company was required to submit an initial listing application with Nasdaq and to obtain Nasdaq approval of the initial listing application prior to the issuance of the Contingent Shares.
On March 25, 2025, the Company received a letter from Nasdaq notifying the Company that it had approved the Company’s initial listing application in connection with the issuance of the Contingent Shares. On March 26, 2025, the Company issued the NTG Sellers an aggregate of 4,393,993 of the Contingent Shares in satisfaction of the Company’s obligations under the Exchange Agreement. As a result of Nasdaq’s approval of our initial listing application, the issuance of the Contingent Shares was completed in compliance with Nasdaq Listing Rule 5110(a) and the Company’s shares of common stock continue to trade on the Nasdaq Capital Market under the symbol “NTRP.”
On May 5, 2025, as a result of the achievement of the fourth and final business milestone, the remaining 1,450,000 Contingent Shares were issued to the NTG Sellers. No additional shares are issuable pursuant to the Exchange Agreement as of the date of this Quarterly Report.
In July 2025, Mr. Kerby, in his capacity as the NTH Representative, informed the Company of his election to exercise the Board Appointment Rights pursuant to the Exchange Agreement and designated Stephen Kircher, Jimmy Byrd, Carmen Diges and David Jiang (collectively, the “NTH Appointees”) as the individuals to replace the continuing legacy Sigma directors. On July 14, 2025, the Company’s Board of Directors appointed the NTH Appointees as directors of the Company, in each case effective July 28, 2025, at which time Salvatore Battinelli, Jacob Brunsberg, Dennis Duitch and Kent Summers resigned as directors of the Company. Stephen Kircher shall serve as a Class I director, with his initial term expiring at the Company’s 2028 Annual Meeting of Stockholders; Jimmy Byrd shall serve as a Class II director, with his initial term expiring at the Company’s 2026 Annual Meeting of Stockholders; and Ms. Diges and Mr. Jiang shall each serve as a Class III director, with their initial terms expiring at the Company’s 2027 Annual Meeting of Stockholders. Each of NTH Appointees will serve as a director for the balance of their respective initial terms, and until his or her successor is elected and qualified, subject to his or her earlier death, resignation or removal.
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Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported assets, liabilities, sales and expenses in the accompanying financial statements. Critical accounting policies are those that require the most subjective and complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. By their nature, changes in these assumptions and estimates could significantly affect our financial position or results of operations. Significant accounting estimates that may materially change in the near future are revenue recognition, impairment of long-lived assets, values of stock compensation awards and stock equivalents granted as offering costs, and allowance for bad debts and inventory obsolescence. Such critical accounting policies, including the assumptions and judgments underlying them, are disclosed in Note 1 of the Notes to Financial Statements included in this Quarterly Report. However, we do not believe that there are any alternative methods of accounting for our operations that would have a material effect on our financial statements.
The critical accounting policies and estimates addressed below reflect our most significant judgements and estimates used in the preparation of our financial statements.
Revenue Recognition – The Company recognizes revenue in accordance with ASC 606 which involves identifying the contracts with customers, identifying performance obligations in the contracts, determining transactions price, allocating transaction price to the performance obligation and recognizing revenue when the performance obligation is satisfied.
The Company recognizes revenue when the customer has purchased the product, the occurrence of the earlier of date of travel or the date of cancellation has expired, as satisfaction of the performance obligation, the sales price is fixed or determinable and collectability is reasonably assured. Revenue for customer travel packages purchased directly from the Company are recorded gross (the amount paid to the Company by the customer is shown as revenue and the cost of providing the respective travel package is recorded to cost of revenues).
The Company generates revenues from sales directly to customers as well as through other distribution channels of tours and activities at destinations throughout the world.
The Company controls the specified travel product before it is transferred to the customer and is therefore a principal, based on but not limited to, the following:
| ● | The Company is primarily responsible for fulling the promise to provide such travel product. | |
| ● | The Company has inventory risk before the specified travel product has been transferred to a customer or after transfer of control to a customer. | |
| ● | The Company has discretion in establishing the price for the specified travel product. |
Payments for tours or activities received in advance of services being rendered are recorded as deferred revenue and recognized as revenue at the earlier of the date of travel or the last date of cancellation (i.e., the customer’s refund privileges lapse).
Investments in Equity Securities without Readily Determinable Fair Value
In accordance with ASC 321-10-35-2, the Company holds certain investments in equity securities in which the Company does not have significant influence or control, and for which fair value is not readily determinable. These investments are primarily accounted for at cost, less any impairment. The carrying amount is periodically evaluated for impairment, and if necessary, an impairment loss is recognized in the statement of operations. These investments are not adjusted for unrealized gains or losses unless an impairment is identified.
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For investments in non-public entities where fair value is not determinable, the Company does not adjust the carrying value for changes in fair value, except for impairment losses. The fair value of these investments is disclosed when it is practicable to determine.
Promissory Note Receivable
Pursuant to the terms of the Promissory Note (the “NextPlay Note”) between NTH and NextPlay Technologies, Inc. (“NextPlay”), the NextPlay Note was due and payable in full on the earlier of September 1, 2023 or the date the Company completed a financing of $10 million or more. No payments have been made by NextPlay, and as such NextPlay is in default under the terms of the NextPlay Note.
On January 27, 2025, as creditors of NextPlay, Donald P. Monaco, the Company’s Chairman, William Kerby, the Company’s Chief Executive Officer, and Ian Sharpe, the Chief Operating Officer of the Company’s Media division, filed a petition to force NextPlay into involuntary bankruptcy as a result of unpaid fees. The proceedings are ongoing and the outcome at this time is uncertain and cannot be predicted. As a result, management has determined that the collectability of the NextPlay Note is uncertain and has therefore established an allowance for credit losses for the entire balance of $2,567,665.
Fair Value Measurements
We measure certain financial instruments at fair value, which requires management to make estimates and assumptions. For most items such as cash, receivables, and payables, fair value is straightforward because of their short-term nature. However, two obligations we assumed in connection with our acquisition of TA Pipeline LLC involve more judgment and could have a meaningful effect on our results.
| ● | Put Option – The restricted shares issued in the acquisition give the sellers the right, under certain conditions, to require us to either repurchase the shares, issue additional shares, or make a cash payment if our stock trades below a set price. We record this obligation as a liability, and its value changes with movements in our stock price and related assumptions. | |
| ● | TA Milestone Payment – We also agreed to make an additional payment to the sellers based on TA Pipeline revenue during the first year after closing. This payment, which will be made in both cash and stock, is also recorded as a liability and depends on our projections for TA Pipeline’s performance. |
Because the fair value of these obligations depends on factors outside of our control, such as our stock price and TA Pipeline’s revenues, the amounts we record may change from period to period. For example, a change in our assumed stock price volatility could change the value of the Put Option liability, while a similar change in projected revenues could affect the Milestone Payment liability.
Stock Based Compensation
We grant stock options, restricted stock, and other equity-based awards to employees, executives, directors, and consultants. The fair value of these awards is measured on the grant date and recognized as compensation expense over the vesting period.
Determining the fair value of stock options requires the use of valuation models, such as the Black-Scholes model, which involve assumptions about stock price volatility, expected term of the option, risk-free interest rates, and dividend yields. These assumptions are based on historical data and market conditions but involve judgment about future trends.
Because changes in these assumptions can significantly affect the estimated fair value, our stock-based compensation expense could vary materially from period to period. For instance, higher assumed volatility or longer expected option lives generally increase the fair value of options, leading to higher compensation expense.
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Goodwill and Intangible Assets
We record goodwill and intangible assets in connection with business acquisitions. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. Intangible assets primarily include trade names, customer and supplier relationships, and technology.
We review goodwill and indefinite-lived intangible assets for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. This process requires management to make assumptions and estimates which involve significant judgment. Changes in assumptions could materially affect whether an impairment is recognized and the amount of any impairment charge.
Business Overview
NextTrip is an early-stage, technology-driven travel company developing an integrated travel booking and media platform designed to connect leisure, group and business travelers to the world. Our travel booking platform is powered by our proprietary NXT2.0 booking engine, which offers extensive inventory, supporting both travelers and distributors with a platform for curating personalized experiences and efficient trip planning and booking. We market our travel services through several core brands including NextTrip Vacations (direct-to-consumer leisure travel), Five Star Alliance (luxury and cruise bookings) and NextTrip Business (small-to-mid-sized corporate travel) and differentiate our platform through specialty features, including specialized widgets for groups (the “Groups Platform”) and travel agents (the “Travel Agent Platform”), as well as PayDlay, a delayed payment booking option. Complementing our booking engine are our media properties, including Journy.tv and Travel Magazine, which provide destination content that we believe will drive high-intention traffic into our booking funnel and, over time, constitute a separate high-margin advertising revenue stream. As part of streamlining our media assets, we merged Compass.tv into Journy.tv in July 2025 to create a unified offering of both FAST (Free Ad-Supported Streaming Television) and VOD (Video on Demand) assets.
By integrating our media properties with our travel booking platform, our objective is to build a next-generation travel solution for consumers, allowing them to better research and explore desired travel destinations. To accomplish this, we have and will be using content from ours and others’ media platforms featuring travel videos, blogs and articles along with access to curated travel products from our strategic partnerships, all supported by our technology and call center agents. Upon full integration of our travel and media platforms, we believe our offers will both inspire and empower consumers to make informed choices when booking. This contrasts with the existing online travel agency (“OTA”) model that focuses on volume bookings with little to no service support.
Current Scale and Going Concern
We are in the earliest stages of commercial operations.
Due to uncertainties regarding our ability to meet our current and future operating and capital expenses, there is substantial doubt about our ability to continue as a going concern for 12 months from the date of filing of this Quarterly Report and the report of our registered independent public accounting firm filed with our Annual Report on Form 10-K for our the fiscal year ended February 28, 2025 contains a going concern qualification.
We expect to continue to incur net losses and negative cash flows from operations for the foreseeable future as we invest in technology enhancements, supplier relationships, and marketing initiatives. Throughout this report, whenever we discuss our operational achievements, ecosystem, or growth plans, you should consider that we presently have nominal revenues, limited operating history, minimal brand awareness, and will require significant additional capital to execute our business model.
NXT2.0 – Our Integrated Travel Booking Platform
At the core of our business is our proprietary, direct-to-consumer NXT2.0 travel booking engine, which has been continually enhanced and developed through a series of acquisitions of a variety of media and travel assets. NXT2.0 powers several websites, including our main leisure site, nexttrip.com, and fivestaralliance.com, our widgets for The Groups and Travel Agent Platforms, as well as providing travel booking solutions for our media hubs, Journy.tv and travelmagazine.com. We serve both leisure and business travelers by offering them access to travel blogs, videos and concierge assistance to aid in planning travel, coupled with our proprietary booking platform for the direct purchase of flights, hotels, vacation homes, cruise, tours, and other travel products. Our content includes destination guides, maps and travel tips, designed to help travelers plan memorable trips and book those trips on our travel platform.
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Travel Products and Services
As with many OTAs or booking engines in the travel industry, a travel booking platform is the technological foundation of our business. Our travel-product strategy relies on the NXT2.0 booking engine, whose commercial viability depends on a mix of higher-margin direct contracts and lower-margin, third-party application program interface (“API”) inventory which broadens the platform’s reach. Our principal objective is to negotiate fixed-base-pricing agreements that confer pricing control and margin optimization; these contracts permit us to deploy competitively priced promotions while preserving profitability. Early initiatives have concentrated on hotel and vacation suppliers, including the April 3, 2025 agreement under which NextTrip became the exclusive booking engine for Intimate Hotels of Barbados, a consortium of more than 35 independent properties.
This flexibility affords us the opportunity to run specials on travel offerings that are highly competitive, but we will require additional funding to support comprehensive marketing and awareness campaigns to attract new customers. Until this happens, we are working to target customers with low dollar marketing campaigns in the leisure travel space, as well as pursuing strategic partnerships and specialized travel offerings (e.g. Groups Platform), while maintaining competitiveness within our marketplace through adjustment of pricing.
To supplement and scale our proprietary content, we have layered in third-party inventory through API integrations, thereby furnishing users with comprehensive, one-stop access to more than four million hotels, vacation rentals, cruises, and activity products worldwide. This phase commenced with the acquisition of BookIt.com and associated access to Expedia’s global hotel database and has since expanded to encompass strategic alliances with Nuitée, Global Distribution Systems, Signature Vacations, and other third-party suppliers. The Company has also strengthened its luxury and cruise offerings through the acquisition of Five Star Alliance, whose curated portfolio of over 5,000 five-star properties and 400,000 monthly site visitors, resulting in an industry coveted 4.9-star Trustpilot rating, helps enhance NextTrip’s technology-driven platform. Collectively, these integrations are intended to provide the inventory depth necessary to activate NextTrip’s specialty features, facilitate cross-selling, and establish a scalable foundation for future direct-contract growth. See “Recent Developments – Acquisition of Five Star Alliance” for more details on the transaction.
The acquisition of TA Pipeline in August 2025 represents a significant milestone in NextTrip’s expansion of its Groups and MICE (Meetings, Incentives, Conferences, Exhibitions) vertical, an area with strong growth potential and margin contribution. TA Pipeline has established itself as a premier group-travel agency platform with deep expertise in delivering end-to-end solutions for conferences, conventions, weddings, and affinity groups, often servicing groups ranging from 50 to 5,000 travelers. Its strong relationships with suppliers, planners, and affinity partners align seamlessly with NextTrip’s vertically integrated “content-to-commerce” ecosystem, providing:
| ● | High-Value Customer Base: The acquisition expands NextTrip’s reach into large group travel organizers, a segment characterized by high transaction values and repeat business. | |
| ● | Technology & Synergies: By integrating TA Pipeline’s customer pipeline into NextTrip’s proprietary NXT2.0 booking technology, PayDlay financing tool, and concierge services, the Company is positioned to enhance conversion rates and drive incremental travel bookings. | |
| ● | Cross-Media Leverage: TA’s group and event-based customers will be supported by NextTrip’s media brands (JOURNY.tv, and Travel Magazine 2.0), creating new marketing opportunities and accelerating NextTrip’s dual revenue model of advertising and travel bookings. |
The TA Acquisition exemplifies the Company’s “buy-and-build” strategy of acquiring complementary assets that are accretive to revenues and synergistic with NextTrip’s broader vision of redefining how consumers and organizations discover, plan, and book travel. See “Recent Developments – Acquisition of TA Pipeline” for more details on the transaction.
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Our offerings include a mixture of direct contracts and third-party API content which span leisure and business travel, alternative lodging, wellness travel, and media solutions, engaging customers throughout their travel journey with both individual and packaged options. Such product offering highlights include:
| ● | NextTrip Leisure – A robust booking engine providing customized vacation packages, flights, hotels, tours, wellness vacations, cruise and group travel options. | |
| ● | NextTrip Luxury & Business – Five Star Alliance provides access to over 5,000 luxury hotel properties worldwide featuring booking, expense reporting, concierge services, and 24/7 support. | |
| ● | NextTrip Cruises – a fully integrated cruise booking engine providing access to over 10,000 sailings and 35 cruise partners. Travelers benefit from exclusive pricing, concierge service, and bundled packages that include transfers, pre- and post-cruise stays, and expert travel support. | |
| ● | NextTrip Solutions – A suite for product management and white-label solutions, including property management, vacation rentals, and a portal to support travel agents – the Travel Agent Platform. | |
| ● | NextTrip Media – Travel Magazine and Journy.tv, offering travelers inspiration and information through articles, videos, and immersive digital experiences. This will include personalized travel content for users to explore and share with friends and family. |
NXT2.0 Platform Features
Our NXT2.0 travel booking platform at nexttrip.com offers tools for browsing and comparing flights, hotels, tours, cruises and activities. Additionally, we allow travelers to defer payments on select vacation packages with our proprietary PayDlay program. PayDlay allows travelers to purchase travel with a small deposit and make subsequent payments between purchase and the week before travel. Registered NextTrip travelers can manage bookings, receive updates on special offers, and subscribe to newsletters with travel tips and destination highlights. Security is a priority, with rigorous content screening and Payment Card Industry compliance to safeguard customer information. The platform further distinguishes itself through exclusive supplier partnerships that yield preferential rates, targeted promotions, and inventory advantages, while its robust architecture supports complex group bookings—covering conferences, conventions, and destination weddings via a specialized Groups Platform—and equips over 150 beta-testing professionals with a Travel Agent Platform that streamlines multi-passenger reservations.
As we execute our business model by increasing our inventory base and expanding key partnerships, we plan to launch a series of additional features designed to benefit its users. We intend to further integrate our media features with our booking system, bringing together travel content and itinerary management in one interface. The “My Journy” personalized travel-planning magazine is intended to provide editorial features, destination information, and user-specific offers based on analysis of past searches and bookings. By including this content in the booking process, NXT2.0 aims to turn browsing into bookings more efficiently and give suppliers better opportunities to promote their products. We also plan to introduce a multi-level rewards program that gives benefits for repeat bookings, using different channels, and social interactions within the platform. A planned group chat and sharing feature will let families, friends, and corporate groups work together on itinerary changes in real time. These developmental features are designed to encourage customer loyalty and keep users engaged with NXT2.0. An AI-powered travel assistant is in development which is intended to provide recommendations, price alerts and support, offering services usually found in premium travel agencies in a digital format. Following the initial launch of the Travel Agent Platform, we are continuing development of new tools for travel agents. With new product options like cruises, wellness retreats, and extra experiences, NXT2.0 aims to attract more leisure and business travelers. These updates are intended to boost user engagement, speed up bookings, and increase customer value, while giving NextTrip a competitive edge through technology and personalized data.
NextTrip Integrated Media Solutions
In addition to the key features, robust inventory, and focus on underserved market opportunities like groups and travel agent bookings, a key differentiator benefiting the growth and development of our NXT2.0 booking engine is our media strategy which, when fully integrated with NXT2.0, is intended to offer a comprehensive travel and media ecosystem designed to guide and support consumers throughout their travel experience from inspiration to booking, to travel to sharing the journey on social media.
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We leverage our media brands—TravelMagazine.com and Journy.tv—as strategic tools to generate travel bookings by integrating content, marketing, and booking technology as well as to generate advertising revenues for third-party content. The strategy includes generating content marketing and inspiration, integrating booking opportunities into that content and generating feedback from such advertising data to better target and identify travel interests and intent, which is intended to lead to growing brand trust and authority and future partnerships and opportunities for sponsored advertising content.
By combining engaging travel content with seamless booking technology and targeted marketing, our media brands serve as both inspiration engines and direct booking channels. This holistic approach helps capture travelers at every stage of the decision-making process, ultimately driving more bookings through the NXT2.0 platform and independent advertising revenue.
Key media brands and partnerships include:
| ● | Travel Magazine – TravelMagazine.com is our media hub. It is an online travel publication that provides articles, guides, tips, and inspiration for travelers. Coming soon is “My Bucket List,” a platform where travelers can create and share personalized travel lists, supported by booking features and local insights. | |
| ● | Journy.tv – In April 2025, we acquired Journy.tv, a Free Ad-Supported Streaming TV (“FAST”) Channel that specializes in travel, adventure, and culture-focused content. In July 2025, we merged Compass.tv, our AVOD (Advertising-based Video on Demand) platform designed to provide streaming television content, into Journy.tv to create a unified offering of both FAST and VOD assets. | |
| ● | Promethean – Promethean is our proprietary interactive video overlay platform which is intended to drive ad revenue and facilitate content-to-commerce integration. | |
| ● | Leap Media – In December 2024, we announced our collaboration with Leap Media Group, a respected leader with over 35 years in TV advertising, media planning and buying, to support the launch of advertising on Journy.tv by delivering branded entertainment content and advertising seamlessly across its platform. | |
| ● | Blue Fysh – In February 2025, the Company and Blue Fysh Holdings Inc. (“Blue Fysh”) entered into a share exchange agreement creating minority ownership positions between the entities, as part of their mutual efforts to work together to expand each company’s business opportunities. See “Recent Developments – Blue Fysh Share Exchange” for more details on the transaction. |
The strategic partnership between NextTrip and Blue Fysh is intended to focus on:
| ● | Expanded audience reach integrating Journy.tv, TravelMagazine.com, and travel products platform, NextTrip.com, with Blue Fysh’s expertise in digital OOH solutions throughout North America; | |
| ● | Increased advertising revenue by leveraging their combined media assets, to enhance their ability to broaden reach, deployment, and higher expected advertising fees, providing greater value to advertisers and stakeholders; | |
| ● | Enhanced sales efforts with NextTrip utilizing Blue Fysh’s strategic sales relationships to contribute advertising sales across NextTrip’s media platforms; and | |
| ● | Increased Brand Awareness as a result of Blue Fysh’s media relationships and digital displays to help create flash marketing campaigns to raise awareness of NextTrip and highlight NextTrip’s travel products and services as well as its media properties, Journy.tv and Travel Magazine. |
Revenue Strategy and Development of an Integrated Travel and Media Ecosystem
Our revenue strategy and business model focuses on integrating our Media and Travel divisions, offering users a comprehensive ecosystem designed to guide and support them throughout the travel experience. Presently, we generate revenue through two core methods: travel bookings and advertising revenue.
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Travel Bookings and Related Services
NextTrip, like many OTAs and travel platforms, can generate revenue through a variety of channels. The specific mix depends on the continued development of our platform, execution of our business model, partnerships, and the types of services we offer at any given time.
Product sales are generally structured either: (1) as a set commission on the sale of a travel product whereby the supplier or wholesaler controls the pricing (as is the case with the majority of Five Star Alliance products), or (2) through a direct, negotiated contract between product supplier and the Company (as is the case with the majority of our products) which allows us to set our own retail pricing based upon market forces and a need to maintain a markup above its fixed cost. Commission-based travel products are generally lower margin than directly negotiated travel products.
The flexibility of directly negotiated contracts affords us the opportunity to both run specials that are highly competitive but result in low margins, or to simply adjust pricing to maintain competitiveness within its market. Key factors that affect revenues and profitability include competitive market pressures from other travel suppliers and distributors, variable contract terms, marketing budget to create awareness, and seasonality.
Leisure travel bookings currently generate the majority of our nominal revenues. This includes the sale of travel products such as airline tickets, hotel rooms, and cruises as well as travel services such as travel insurance and ground activities. While we believe this revenue can be accelerated with an enhanced marketing budget, management has largely focused on supplements to its travel offerings by including travel technology products such as our Travel Agent and Groups Platforms.
Additionally, offering concierge-level customer support, trip planning assistance or other premium features can provide peace of mind and added convenience and may result in premium service fees added to the cost of booking, which represents direct revenue for us.
Advertising
We are building our own media and advertising ecosystem through Travel Magazine and Journy.tv. These media platforms are designed to allow users to explore and educate themselves on travel. The revenue strategy in the media division is two-pronged: (1) as the number of viewers/users grows, it drives the advertising rates we can charge third-parties to promote travel products and services to our audience and (2) outside of the direct advertising dollars generated from our media platforms which are expected to become a key driver of higher margin revenue than those earned from travel product sales, as the audience grows it will provide additional opportunities for us to promote ours own travel offerings to highly targeted viewers, thus lessening the need for spending significant marketing dollars through other mediums to attract consumers.
To drive this initiative, we have entered into partnerships with Travel Spike and Leap Media Group, respected leaders in the travel category with decades of experience in TV advertising, media planning and buying. Journy.tv is now equipped to deliver branded entertainment content and advertising seamlessly across its platform, supported by targeted media strategy designed to optimize revenue well delivering high quality content to travel enthusiasts.
Development of Integrated Revenue Model – Strategy and Current Status
As we are still in the developmental phase of our commercial operations and have thus far realized only nominal revenues, the successful execution of our business strategy is predicated upon our capacity to broaden and deepen our supplier base, cultivate and maintain a robust customer network, and obtain adequate financing to underwrite our marketing initiatives and continued product development. There can be no assurance that we will be able to accomplish any of these objectives.
We are in the early stages of development and roll out of our comprehensive travel and media model. While the products introduced to date are now functional and responsible for the current, nominal revenue generation of the Company, the corresponding revenue streams are currently both small and unpredictable relative to the established travel industry leaders.
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While our core marketing initiatives have been handicapped due to budget constraints, we have undertaken limited promotions focused on higher margin products, in sought after vacation regions like Mexico and the Caribbean. Recognizing these marketing budget restraints, we focused our efforts on expanding our product offering globally with major suppliers, including Expedia and Nuitée, among others. Management believes this was a critical step to allow for the launch and promotion of specialty travel services like NextTrip’s Groups Platform (i.e. destination weddings, conferences and conventions), NextTrip Travel Agents Platform and business-focused travel offerings. These types of programs require unique technologies, broad global inventory offerings, and specialized servicing. Key to this development is the fact that the platforms fall outside of the typical OTA business model, thereby justifying the supply of travel products from large OTAs, which in turn supports our platforms while being mutually beneficial to both parties.
Our ability to capitalize on existing travel technology platforms is severely restricted due to the lack of funding to drive marketing programs. Enhancements to the existing platforms along with the introduction of new programs under development are needed to complete the model. The timeline to complete these programs is dependent upon our ability to raise capital; however, we believe that most programs can be delivered within 180 days of obtaining such necessary funding. Once fully functioning, we believe the model will deliver accelerated growth as its “conversion technology” focuses on underserved areas in the travel sector utilizing platforms (i.e. PayDlay, Groups bookings and Travel Agents) that are not well serviced by the major travel industry leaders. Additionally, we have introduced engagement and media solutions (i.e. Journy.tv Travel Magazine), allowing users to better plan future travel. We believe a natural extension of providing users with media solutions to assist with travel planning will further the development and growth of a NextTrip ecosystem. This ecosystem is expected to assist us in reducing external marketing expenditures while creating a new revenue channel from targeted and timely advertising designed to assist users in their travel planning. Upon completion of the NextTrip model, we expect to drive revenues from travel solutions outside of the focus of major travel competitors.
We are also engaging Save Your Day Films, a London-based production company celebrated globally for award-winning factual programming and captivating travel content, as an in-house production partner to deliver exclusive content as part of our media strategy, driving traffic, cross-promotional opportunities and licensing revenues.
Recent Developments
Acquisition of TA Pipeline
On August 6, 2025, the Company entered into a Membership Interest Purchase Agreement (the “TA MIPA”) with TA Pipeline LLC (“TA”) and the members of TA (the “TA Members”), pursuant to which the Company purchased all of the issued and outstanding membership interests of TA from the TA Members (the “TA Acquisition”), resulting in TA becoming a wholly-owned subsidiary of the Company. The TA Acquisition closed on August 6, 2025.
Pursuant to the TA MIPA, as consideration for the TA Acquisition, at closing, the Company (i) paid the TA Members an aggregate of $443,169 in cash (the “TA Closing Payment”), $118,169 of which (the “Estimated Additional Closing Payment”) was paid as a purchase price adjustment based on the Members’ Deficit (as defined in the TA MIPA) set forth in the closing balance sheet provided by TA in connection with closing, as more particularly provided for by the TA MIPA; and (ii) issued an aggregate of 96,774 restricted shares of Company common stock (the “TA Closing Shares,” and together with the TA Closing Payment, the “TA Closing Consideration”) to the TA Members, valued at $300,000, based on a price per share of $3.10. The Estimated Additional Closing Payment is subject to adjustment, upward or downward, to the extent that the Members’ Deficit as of the closing date is determined to be less than or exceed $175,000, as provided in the TA MIPA. In addition to the TA Closing Consideration, and as further consideration for the TA Acquisition, the Company shall make an additional payment to the TA Members in the form of an earnout (the “TA Milestone Payment”), which shall be in an amount equal to five percent (5%) of the net revenues generated by TA during the 12 month period after the closing date (the “Milestone Period”), up to a maximum of $200,000. The TA Milestone Payment shall be paid to the TA Members within 10 days following completion of the Milestone Period and will be payable fifty percent (50%) in cash and fifty percent (50%) in restricted shares of Company common stock (the “TA Milestone Shares,” and together with the TA Closing Shares, the “TA Acquisition Shares”), to be calculated based on a price per share of $3.10.
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In addition to the foregoing, in the event that the Fair Market Value of the Company’s common stock is less than $3.10 (the “Base Price”) during the applicable Exercise Period, each TA Member shall have the limited, one time option, to exercise one of the following rights as to some or all of their outstanding TA Acquisition Shares by delivering notice to the Company: (i) the right to require the Company to repurchase from the TA Member all or any portion of their outstanding TA Acquisition Shares at the Base Price; (ii) the right to require the Company to issue to such TA Member that number of additional shares of Company common stock (the “Top Up Shares”) as is necessary to make the aggregate value of the number of TA Acquisition Shares specified in the notice (based on the Fair Market Value) equal to the original aggregate value of the number of TA Acquisition Shares specified in the notice (based on the Base Price); and (iii) the right to require the Company to pay to such TA Member, in cash, an amount equal to the product of (x) the number of TA Acquisition Shares specified in the notice and (y) the positive difference, if any, between the Base Price and the Fair Market Value. For purpose of the foregoing rights, the “Exercise Period” means the three month period commencing upon the earlier of: (i) with respect to the TA Closing Shares, (x) the date that the TA Closing Shares first become eligible for public resale and (y) the first anniversary of the closing date; and (ii) with respect to the TA Milestone Shares, (x) the date that the TA Milestone Shares first become eligible for public resale and (y) the first anniversary of the closing date. Additionally, for purpose of the foregoing rights, “Fair Market Value” means the volume weighted average price per share of the Company’s common stock for the twenty consecutive trading days immediately preceding the notice date. During the Exercise Period, each of the TA Members shall be prohibited from engaging in certain transactions in the Company’s stock, as more particularly set forth in the TA MIPA.
In consideration for their receipt of the foregoing consideration, at closing of the TA Acquisition, each of the TA Members entered into restrictive covenant agreements providing for certain customary restrictive covenants, including customary non-competition, non-solicitation and no hire covenants for a period of three years following the closing date, and customary confidentiality covenants.
Acquisition of Five Star Alliance
On February 6, 2025, the Company entered into a Membership Interest Purchase Agreement (the “FSA Purchase Agreement”) with 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 FSA Purchase Agreement, on February 10, 2025 (the “Initial Closing Date”), the Company purchased 9,608 membership units of FSA (equal to a 49% ownership stake in FSA immediately after closing) (the “Initial Interests”) in exchange for the Company’s (i) payment of $500,000 in cash and (ii) issuance of 161,291 shares of newly designated Series O Nonvoting Convertible Preferred Stock of the Company (“Series O Preferred”) to FSA. In connection with, and as a condition to, the Initial Closing, the Company entered into employment agreements with Mr. McMahon and Courtney May, each of whom became employees of the Company as of the Initial Closing Date.
In addition, subject to satisfaction of the conditions discussed below, the FSA Purchase Agreement provided the Company 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 the Company 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 FSA Members (the “Final Closing”). The Company’s Option was subject to, and contingent upon, satisfaction of the following conditions: (i) the continued employment of Mr. McMahon and Ms. May by the Company, subject to limited exceptions, (ii) the completion of a $2,000,000 capital raise by the Company, 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”), upon FSA’s agreement to waive the capital raise condition to closing, the Company exercised the Option and, in satisfaction of its obligations under the Purchase Agreement in connection with the Final Closing, the Company 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, the Company acquired the remaining 51% of the membership units in FSA and FSA became a wholly-owned subsidiary of the Company.
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In addition to the above consideration, the FSA Purchase Agreement provided that the Company shall make additional payments to the FSA 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 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 parties determined that each of the foregoing milestones had been achieved, and in satisfaction of its obligations under the FSA Purchase Agreement, the Company 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.
Blue Fysh Share Exchange
On February 24, 2025, the Company and Blue Fysh entered into a share exchange agreement (the “BF Share Exchange Agreement”) whereby Blue Fysh agreed to issue 82 restricted shares of its common stock to the Company, representing a 10% interest in Blue Fysh, in exchange for 483,000 restricted shares of Series N Nonvoting Convertible Preferred Stock (the “Series N Preferred”) of the Company at an issuance price of $5.00 per share (the “BF Share Exchange”). The BF Share Exchange closed on February 28, 2025. The parties entered into the BF Share Exchange Agreement, creating minority ownership positions between the entities, as part of their mutual efforts to work together to expand each company’s business opportunities.
Journy.tv Asset Purchase
On April 1, 2025, the Company entered into an asset purchase agreement (the “Journy.tv Purchase Agreement”) with Ovation LLC (“Ovation”), pursuant to which the Company purchased assets, including without limitation trademarks, domains, apps and certain agreements, and assumed certain liabilities related to Ovation’s Journy.tv business (the “Journy.tv Acquisition”). The Journy.tv Acquisition closed on April 1, 2025.
Pursuant to the Journy.tv Purchase Agreement, as consideration for the Journy.tv Acquisition, the Company paid Ovation $300,000 in cash at closing and issued Ovation 20,000 restricted shares of Company common stock.
In connection with the Journy.tv Acquisition, on April 1, 2025, the Company and Ovation also entered into a License Agreement (the “License Agreement”), pursuant to which Ovation granted the Company the non-exclusive right, throughout the territories and for the term set forth therein, to exhibit, promote, market, advertise, publicize and/or otherwise exploit the programs listed in the License Agreement in the media of (i) FAST via the Journy.tv Channel and (ii) Video On Demand via the Journy.tv Channel. Pursuant to the License Agreement, Ovation shall not license any unaffiliated third party the right to exhibit certain of the programs subject to the License Agreement and shall not use certain of the programs subject to the License Agreement on its owned or operating streaming platforms (subject to certain exceptions). As consideration for the rights granted under the License Agreement, the Company agreed to pay Ovation an aggregate non-refundable license fee of $336,801, payable in various tranches through October 31, 2027. Either party may terminate the License Agreement in the event of a material default by the other party that is not cured within fifteen days after the defaulting party receives notice of such default.
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Strategic Partnership with Intimate Hotels of Barbados (“IHB”)
On April 3, 2025, we entered into a strategic partnership with IHB, a collection of over 35 independent hotels and vacation rentals. The Company will serve as the official booking engine for IHB, providing a fully integrated travel portal and customized packaging tools directly on the IHB website.
NextTrip Cruise Launches, Offering Seamless Cruise Booking Experience
On March 27, 2025, the Company unveiled NextTrip Cruise, a fully integrated cruise booking engine providing access to over 10,000 sailings and 35 cruise partners. Travelers benefit from exclusive pricing, concierge service, and bundled packages that include transfers, pre- and post-cruise stays, and expert travel support.
Changes to the Board of Directors
On July 14, 2025, the Company’s Board of Directors adopted a resolution to increase the size of the board from five to seven members and appointed Bill Kerby, the Company’s Chief Executive Officer, and Andy Kaplan as directors to fill the newly created vacancies, in each case effective July 17, 2025. Mr. Kerby shall serve as a Class II director of the Company, with his initial term expiring at the Company’s 2026 Annual Meeting of Stockholders, and Mr. Kaplan shall serve as a Class III director, with his initial term expiring at the Company’s 2027 Annual Meeting of Stockholders. Each of Messrs. Kerby and Kaplan will serve as a director for the balance of their respective initial terms, and until his successor is elected and qualified, subject to his earlier death, resignation or removal. Additionally, effective July 17, 2025, the Board appointed Mr. Kaplan to serve as a member of the Nominations & Governance Committee of the Board.
Additionally, in accordance with the Board Appointment Rights provided for in the Exchange Agreement, on July 14, 2025, the Company’s Board of Directors appointed the NTH Appointees as directors, in each case effective July 28, 2025, at which time Salvatore Battinelli, Jacob Brunsberg, Dennis Duitch and Kent Summers resigned as directors of the Company. Stephen Kircher shall serve as a Class I director, with his initial term expiring at the Company’s 2028 Annual Meeting of Stockholders; Jimmy Byrd shall serve as a Class II director, with his initial term expiring at the Company’s 2026 Annual Meeting of Stockholders; and Ms. Diges and Mr. Jiang shall each serve as a Class III director, with their initial terms expiring at the Company’s 2027 Annual Meeting of Stockholders. Each of NTH Appointees will serve as a director for the balance of their respective initial terms, and until his or her successor is elected and qualified, subject to his or her earlier death, resignation or removal. Additionally, effective July 28, 2025, the Board appointed the NTH Appointees to serve on the following committees of the Board:
| ● | Audit Committee: Carmen Diges (Chair), Stephen Kircher and Jimmy Byrd | |
| ● | Compensation Committee: Jimmy Byrd (Chair), Stephen Kircher and Carmen Diges | |
| ● | Nominations & Governance Committee: David Jiang (Chair) and Carmen Diges |
Results of Operations
Three Months Ended August 31, 2025 Compared to the Three Months Ended August 31, 2024
During the three months ended August 31, 2025, we recognized revenue of $757,648, as compared to $154,498 in the same period in 2024, an increase of $603,150, or 390%. The increase was primarily due to group travel-related revenues, a consortia payment, and commission income generated from Five Star Alliance (“FSA”) bookings.
Our cost of revenue for the three months ended August 31, 2025 was $592,073, as compared to $155,455 for the same period in 2024, an increase of $436,618, or 281%. The increase was primarily attributable to the increase in sales from the second quarter of 2025 as compared to the second quarter of 2024.
Our gross margin for the three months ended August 31, 2025 was 21.9%, as compared to (0.6%) for the same period in 2024. The improvement in gross margin is primarily attributable to FSA travel bookings and group travel bookings.
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Our total operating expenses for the three months ended August 31, 2025 were $3,368,452, as compared to $1,468,335 for the same period in 2024, an increase of $1,900,117, or 129%. The increase was primarily attributable to stock options granted to the Company’s former directors and an increase in professional services expenses, as further discussed below. Non-cash expenses, primarily consisting of stock based compensation, stock options granted to former directors, common and preferred shares issued to third parties for services, and depreciation and amortization totaled $1,271,354, or 37.7% of our operating expenses for the three months ended August 31, 2025, and $172,473, or 11.8% of our operating expenses for the same period in 2024.
Salary and benefits costs were $695,538 for the three months ended August 31, 2025, as compared to $628,759 for the same period in 2024, an increase of $66,779, or 11%. The increase was comprised of: (a) an increase in salaries of $43,823 due to the addition of two FSA employees pursuant to the acquisition; (b) an increase in taxes and benefits of $25,270; and(c) an increase in SAR expense of $2,493; these increases were partially offset by a decrease in severance expense of $4,808.
Stock-based compensation was $0 for the three months ended August 31, 2025, as compared to $13,841 for the same period in 2024, a decrease of $13,841 as all outstanding options are fully vested and no new options were granted during the period.
We incurred general and administrative costs of $31,736 during the three months ended August 31, 2025, as compared to $21,677 in the same period in 2024, an increase of $10,059, or 46%. The increase was primarily the result of $12,110 in travel expenses incurred for a conference, partially offset by a decrease in rent expense of $2,051.
We incurred marketing costs of $174,444 during the three months ended August 31, 2025, as compared to $51,347 during the same period in 2024. The increase of $123,097, or 240%, was due to increase in expenses associated with the enhancement of the Travel Magazine website of $77,600 aimed at driving traffic and generating business across all of our brands, an increase in media consulting expenses of $27,410 due to the engagement of a social media influencer agency for Journy.tv, an increase in outside marketing services of $15,203, and an increase in marketing and advertising expenses of $2,884.
We incurred technology costs of $267,021 during the three months ended August 31, 2025, as compared to $141,022 during the same period in 2024. The increase of $125,999, or 89%, was primarily attributable to: (a) an increase in expenses in connection with Journy.tv of $98,599 for content licensing; (b) an increase in dues and subscriptions expense of $11,101 primarily related to the integration of our new CRM and business management system, Zoho One; (c) an increase of $9,690 in cloud database expenses related to the addition of hosting FSA; (d) an increase in information technology and computer expenses of $6,276; and (e) an increase in software expenses of $333.
Professional service fees incurred in the three months ended August 31, 2025 were $1,429,072, as compared to $372,027 incurred during the same period in 2024, an increase of $1,057,045, or 284%. This increase was a result of: (a) an increase in investor relations expenses of $394,075 due to the renewal of existing contracts plus the addition of three new contracts; (b) an increase in legal fees of $260,217 due to services related to various regulatory filings and acquisitions; (c) an increase in consulting fees of $231,424 for business development initiatives; (d) an increase in contract labor related to Journy.tv and operations of $93,932; (e) an increase in accounting expenses of $53,397 due to technical accounting services related to the acquisition of FSA and Journy.tv.; and (f) an increase in lending fees of $24,000 related to bridge loan financings.
Organizational costs for the three months ended August 31, 2025, were $470,105, as compared to $80,452 for the same period in 2024, an increase of $389,653. The increase is primarily attributable to the issuance of stock options to former directors as compensation for their services.
Depreciation and amortization expense for the three months ended August 31, 2025 was $216,625, as compared to $95,414 for the same period in 2024, an increase of $121,211, or 127%. The increase was primarily due to commencing amortization of Journy.tv, and the FSA tradename and software.
Other operating expenses were $83,911 for the three months ended August 31, 2025, as compared to $63,796 for the same period in 2024. The $20,115 increase was primarily due to a timing difference in billing for D&O and other insurance of $14,572 and an increase in merchant processing fees of $5,543, primarily related to TA Pipeline.
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During the three months ended August 31, 2025, we realized net other income of $304,722, as compared to net other expense of $64,227 in the same period in 2024. The increase in net other income of $368,949 was primarily due to a settlement agreement between NextTrip Group, LLC and the Company related to the NextPlay Technologies, Inc. promissory note receivable of $583,000, and the August 31, 2025 revaluation of the derivative liability, which decreased the liability by $10,000, partially offset by (a) interest expense of $171,105 in connection the amortization of the debt discount associated with bridge loans and (b) interest expense associated with notes payable and other expenses of $52,946.
Preferred dividends for the three months ended August 31, 2025 were $183,263 as compared to $10,688 for the same period in 2024. The increase was due to dividends paid to the holders of shares of Series L and Series M Preferred stock issued in connection with debt conversions in December 2024 and February 2025.
In the three months ended August 31, 2025, the net loss from continuing operations totaled $2,898,155, as compared to a net loss from continuing operations of $1,533,519 for the same period in 2024 an increase of $1,364,636. The operating loss component increased by $1,733,585 in 2025, partially offset by an increase in the other income component of $368,949.
The net loss from discontinued operations for the three months ended August 31, 2025 was $0 as compared to $1,131 for the same period in 2024.
Our net loss applicable to common stockholders for the three months ended August 31, 2025, was $3,081,418, as compared to $1,545,338 for the same period in 2024, an increase of $1,536,080, or 99%. The increase was primarily attributable to an increase in operating loss from continued operations of $1,733,585 and an increase in preferred dividends of $172,575; partially offset by an increase in other income of $368,949 and a decrease in the loss from discontinued operations of $1,131.
Six Months Ended August 31, 2025 Compared to the Six Months Ended August 31, 2024
During the six months ended August 31, 2025, we recognized revenue of $896,475, as compared to $343,291 in the same period in 2024, an increase of $553,184, or 161%. The increase was primarily due to group travel-related revenues, a consortia payment, and commission income generated in connection with the Five Star Alliance luxury travel bookings.
Our cost of revenue for the six months ended August 31, 2025 was $691,994, as compared to $329,036 for the same period in 2024, an increase of $362,958, or 110%. The increase was primarily attributable to the increase in sales from the second quarter of 2025 as compared to the second quarter of 2024.
Our gross margin for the six months ended August 31, 2025 was 22.8%, as compared to 4.2% for the same period in 2024. The improvement in gross margin is primarily attributable to FSA travel bookings and group travel bookings.
Our total operating expenses for the six months ended August 31, 2025 were $8,047,095, as compared to $3,435,948 for the same period in 2024, an increase of $4,611,147, or 134%. The increase was primarily attributable to stock options granted to former directors and an increase in professional services expenses, as further discussed below. Non-cash expenses, primarily consisting of stock based compensation, stock options granted to former directors, common and preferred shares issued to third parties for services, and depreciation and amortization totaled $4,251,469, or 52.8% of our operating expenses for the six months ended August 31, 2025, and $544,571, or 15.9% of our operating expenses for the same period in 2024.
Salary and benefits costs were $1,392,453 for the six months ended August 31, 2025, as compared to $1,255,511 for the same period in 2024, an increase of $136,942, or 11%. The increase was comprised of: (a) an increase in salaries of $69,637 due to the addition of two Five Star Alliance employees pursuant to the acquisition; (b) an increase in taxes and benefits of $46,160; (c) an increase in SAR expense of $17,189 due to a revaluation in April 2025; and (d) an increase in bonus and commission expense of $8,764; partially offset by a decrease in severance expense of $4,808.
Stock-based compensation was $138,325 for the six months ended August 31, 2025, as compared to $30,235 for the same period in 2024. This increase of $108,090. was due to a stock option grant to an employee that was fully vested on the date of the grant.
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We incurred general and administrative costs of $62,324 during the six months ended August 31, 2025, as compared to $49,231 in the same period in 2024, an increase of $13,093, or 27%. The increase was primarily the result of $21,460 in travel expenses incurred for conferences, partially offset by a decrease in payroll services fees of $7,712 as a result of changing payroll service providers, lower license and filing fees of $2,868, and lower rent expenses of $2,417.
We incurred marketing costs of $264,479 during the six months ended August 31, 2025, as compared to $207,536 during the same period in 2024. The increase of $56,943, or 27%, was for a consulting contract for marketing services of $75,744, increased Travel Magazine expenses of $53,776 aimed at driving traffic and generating business across all of our brands, and an increase media consulting expenses of $27,410 due to the engagement of a social media influencer agency. Partially offsetting the increase was a decrease of $88,560 in fees previously incurred from a former media advertising firm, and a decrease in contract labor of $11,427 due to the completion of project-based initiatives.
We incurred technology costs of $568,836 during the six months ended August 31, 2025, as compared to $325,691 during the same period in 2024. The increase of $243,145, or 75%, was primarily attributable to: (a) an increase in expenses in connection with Journy.tv of $222,775 for content licensing; (b) an increase in information technology and computer expenses of $11,715 primarily due to onboarding additional employees and use of outsourced IT services; (c) an increase in dues and subscriptions of $2,712 due to the implementation of our new CRM and business management system, Zoho One, partially offset by a decrease in marketing subscriptions; and (d) an increase in software expenses of $1,923 for hotel connections into the NextTrip database. Partially offsetting these increases is a net decrease of $1,610 in cloud database expenses primarily related to updating legacy code to optimize compatibility with our hosting infrastructure.
Professional service fees incurred in the six months ended August 31, 2025 were $2,598,548, as compared to $895,900 incurred during the same period in 2024, an increase of $1,702,648, or 190%. This increase was a result of: (a) an increase in investor relations expenses of $851,425 due to renewal of existing contracts and the addition of three new investor relations firms; (b) an increase in consulting fees of $381,889 due to contracts for services related to business development; (c) an increase in legal fees of $165,812 due to services related to various regulatory filings and acquisitions; (d) an increase in accounting expenses of $148,337 due to costs associated with technical accounting services related to the FSA, Journy.tv and TA Pipeline acquisitions, as well as a required two-year audit and first quarter financial statement review for FSA; (e) an increase in lending fees of $85,500 related to bridge loan financings; and (f) and increase in contract labor of $69,685 related to Journy.tv and other operations.
Organizational costs for the six months ended August 31, 2025, were $2,469,775, as compared to $109,189 for the same period in 2024, an increase of $2,360,586. The increase is primarily attributable to fully vested stock options granted to former directors.
Depreciation and amortization expense for the six months ended August 31, 2025 was $423,274, as compared to $383,000 for the same period in 2024, an increase of $40,274, or 11%. The increase was primarily due to commencing amortization upon the product launch of our FAST network, Journy.tv, and the FSA tradename and software.
Other operating expenses were $129,081 for the six months ended August 31, 2025, as compared to $179,655 for the same period in 2024. The $50,574 decrease was primarily due to the reduced cost of D&O and other insurance costs of $37,695 and a net decrease in merchant processing fees of $18,878 due to engaging a new merchant processor with lower rates.
During the six months ended August 31, 2025, we realized net other income of $498,533, as compared to net other expense of $99,452 in the same period in 2024. The increase in net other income of $597,985 was primarily due to a settlement agreement between NextTrip Group, LLC and the Company related to the NextPlay Technologies, Inc. promissory note receivable of $1,123,245, and the August 31, 2025 revaluation of the derivative liability which resulted in a decrease in the liability of $10,000, partially offset by: (a) a loss of $70,100 related to the extinguishment of debt; and (b) interest expense of $402,845 primarily in connection the amortization of the debt discount associated with bridge loans and (c) an increase in interest expense associated with notes payable and other expenses of $62,315.
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Preferred dividends for the six months ended August 31, 2025 were $247,725, as compared to $21,376, for the same period in 2024. The increase was due to dividends paid to the holders of shares of Series L and Series M Preferred stock issued in connection with debt conversions in December 2024 and February of 2025.
The net loss on the share of net earnings from the equity method investment was $11,307 due to losses incurred in FSA from March 1, 2025 through April 9, 2025 when the full acquisition was finalized.
The net gain on discontinued operations for the six months ended August 31, 2025 was $0 as compared to $7,778 for the same period in 2024.
Our net loss applicable to common stockholders for the six months ended August 31, 2025, was $7,603,113, as compared to $3,534,743 for the same period in 2024, an increase of $4,068,370, or 115%. The increase was primarily attributable to an increase in operating loss from continued operations of $4,420,921 and an increase in preferred dividends of $226,349, a loss on the 49% share of net earnings for the equity method investee of $11,307, and a decrease in income from discontinued operation of $7,778, partially offset by an increase in other income of $597,985.
Liquidity and Capital Resources
Due to uncertainties regarding our ability to meet our current and future operating and capital expenses, there is substantial doubt about our ability to continue as a going concern for 12 months from the date of the filing of this Quarterly Report,
As of August 31, 2025, we had $1,837,654 in cash and a working capital deficit of $1,477,647, as compared to $1,062,367 in cash and a working capital deficit of $105,577 as of February 28, 2025. Additionally, at August 31, 2025, the amount due under our related party line of credit totaled $2,831,575.
Given the lack of significant revenue since inception, NextTrip has financed its operations primarily through the issuance of short-term promissory notes, advances from related parties, and private placements of its securities.
On May 6, 2025, we entered into a Line of Credit Agreement (the “MIP Line of Credit”) with Monaco Investment Partners II, LP (“MIP”) providing the Company with a $3,000,000 revolving line of credit. The MIP Line of Credit allows the Company to request advances thereunder from time to time until May 31, 2027, the maturity date. Advances made under the MIP Line of Credit bear simple interest at a rate of 12% per annum, calculated from the date of each respective advance. Accrued interest shall be payable on a monthly basis, no later than the 10th day of the subsequent month. The full outstanding principal balance, together with any accrued and unpaid interest, shall be due and payable in full by the Company on the maturity date. The Company may, at its option, prepay any borrowings under the MIP Line of Credit, in whole or in part, at any time prior to the maturity date, without penalty. Mr. Monaco controls MIP.
We received an initial advance of $1,045,000 under the MIP Line of Credit, which was used to repay (i) a $400,000 cash advance previously made by the Trust to the Company (ii) and all outstanding indebtedness under the terms of the Trust Notes, totaling $645,000. Subsequent advances through August 2025 totaled $1,786,575, bringing the total outstanding principal at August 31, 2025 to $2,831,575. From September 1, 2025 through September 10, 2025 additional advances totaled $168,425, and as of September 10, 2025 the outstanding principal balance was $3,000,000, which is the maximum amount available under the MIP Line of Credit.
At August 31, 2025, there were other outstanding short-term notes payable in the aggregate amount of $563,501, which had maturity dates between September 15, 2025 and December 31, 2025.
Subsequent to August 31, 2025, on September 10, 2025, the Company entered into securities purchase agreements (each a “Series Q Purchase Agreement”) with Andy Kaplan and Jimmy Byrd, two of our independent directors, pursuant to which the Company issued and sold respectively, 31,250 and 50,000 restricted shares of newly designated Series Q Nonvoting Convertible Preferred Stock of the Company (the “Series Q Preferred”), (the “Series Q Offering”) at a purchase price of $3.20 per share, resulting in proceeds to the Company of $260,000.
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On September 26, 2025, the Company sold a short-term promissory note to 1800 Diagonal Lending LLC in the aggregate principal amount of $269,000. The note includes an OID of $37,000, and bears a one-time interest charge of 13%, which was applied on the issuance date to the principal. The note is payable in five installments, with the first payment in the amount of $151,985 due on March 30, 2026, and the remaining four equal installments of $21,484 are due on the 30th of each of the next four successive months. The note may be prepaid at any time with no prepayment penalty. Upon the event of default by the Company, any unpaid principal and interest may be converted to common stock at the election of 1800 Diagonal Lending LLC.
On October 8, 2025, the Company entered into a securities purchase agreement with Caesar Capital Group LLC, pursuant to which the Company issued and sold 62,500 shares of common stock at a purchase price of $3.20 per share, resulting in total proceeds of $200,000.
We will need to raise additional funds through equity or debt financings or other means to support our 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 and maintaining compliance with Nasdaq listing requirements until planned revenue streams are fully implemented and begin to offset the our operating costs. The Company estimates that it will require a minimum of $5.5 million to continue operations for the next twelve months.
There is no assurance as to the amount and availability of any required future financing or the terms thereof. Such financing, if in the form of equity, may be highly dilutive to our existing stockholders and may otherwise include onerous terms. If in the form of debt, such financing may include covenants and repayment obligations which may be difficult to meet and that could adversely affect our business and operations. To the extent that funds are not available to us, we may be required to delay, limit, or terminate our business and operations and lose our Nasdaq listing.
Net Cash Used in Operating Activities
Net cash used in operating activities from continuing operations totaled $470,283 during the six months ended August 31, 2025 as compared to $1,960,326 during the same period in 2024, a decrease of $1,490,043, or 76.0%.
During the six months ended August 31, 2025, the net cash used in operating activities was the result of a net loss of $7,355,388 before payment of preferred dividends, partially offset by changes in working capital of $2,149,102, and non-cash expenses of $4,736,003 related to stock options issued to former directors totaling $2,368,709, employee stock-based compensation of $138,325, depreciation and amortization of $423,274, amortization of prepaid expenses of $1,323,199, amortization of debt discount of $402,846, a write-off of technology costs of $19,550 related to an abandoned software implementation, and a loss on the extinguishment of debt of $70,100, partially offset by a gain on the derivative liability of $10,000. Changes in working capital were driven by an increase in deferred revenue of $2,000,939 related to the TA Pipeline acquisition, an increase in accounts payable and accrued expenses of $87,598, a decrease in prepaid expenses of $206,382, and the assumption of the SBA EIDL loan from FSA of $98,532 partially offset by an increase in accounts receivable of $244,349.
During the six months ended August 31, 2024, the net cash used in operating activities was the result of a net loss of $3,521,145 before preferred dividends, partially offset by changes in working capital of $1,147,584, and non-cash expenses of $413,235 related to depreciation and amortization of $383,000 and stock-based compensation of $30,235. Changes in working capital were driven by a decrease in accounts receivable of $22,881, a decrease in prepaid expenses of $96,051, and an increase in accounts payable and accrued expenses of $1,033,506, partially offset by an increase in security deposits of $3,000 and a decrease in deferred revenue of $1,854.
Net Cash Used in Investing Activities
Net cash used in investing activities during the six months ended August 31, 2025 was $1,752,168, which compares to $389,568 of cash used in investing activities during the same period of 2024, an increase of $1,362,600, or 349.8%. The increase resulted from $900,000 related to the acquisition of FSA, $300,000 related to the Journy.tv asset purchase and $443,168 related to the acquisition of TA Pipeline LLC, partially offset by a decrease of $280,568 in capitalized software development costs.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the six months ended August 31, 2025 was $2,997,738 as compared to $2,120,317 for the same period in 2024. The increase of $877,421, or 41.4%, was due to an increase in advances from related parties of $654,683 and proceeds from private placements of $396,500, partially offset by a reduction in notes payable of $173,762.
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Our ability to continue to fund our working capital needs will be dependent upon the success of our efforts to generate revenues from our operations, and by obtaining additional capital from the sale of securities or by borrowing funds from lenders to fulfill our business plans. If we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. There is no assurance that we will be successful in obtaining additional funding. The Company is unable to predict the effect a global recession or geopolitical events, including the on-going conflict in Ukraine, may have on its access to the financing markets. If we fail to obtain sufficient funding when needed, we may be forced to delay, scale back or eliminate all or a portion of our commercialization efforts and operations.
Other than the related party promissory notes as described in NOTE 10 – Related Party Transactions to the financial statements included elsewhere in this Quarterly Report, we have no lines of credit or other financing arrangements.
Inflation, changing prices and rising interest rates have had no material effect on our continuing operations over our two most recent fiscal years. However, continued unfavorable trends may affect the prices we pay for materials and other goods and services necessary to our business, thus increasing our use of cash.
We have no off-balance sheet arrangements as defined in Item 303(a) of Regulation S-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and our Chief Financial Officer, after evaluating our “disclosure controls and procedures” (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) as of the end of the period covered by this Quarterly Report (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, where appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 1A. RISK FACTORS.
You should consider the “Risk Factors” included under Item 1A of our Annual Report on Form 10-K for the year ended February 29, 2025 filed with the SEC on May 29, 2025, as well as the following updated Risk Factor:
As of August 31, 2025, we had $1,837,654 in cash and a working capital deficit of $1,477,647. Our existing cash on hand and anticipated revenues are not sufficient to fund our anticipated operating costs. We will need to raise additional financing to fund our operations, maintain compliance with the Nasdaq continued listing requirements and implement our business plan. There is no assurance as to the amount and availability of any required future financing or the terms thereof. Such financing, if in the form of equity, may be highly dilutive to our existing stockholders and may otherwise include onerous terms. If in the form of debt, such financing may include covenants and repayment obligations which may be difficult to meet and that could adversely affect our business operations. We have no current understanding or arrangement to obtain any additional financing. To the extent that funds are not available to us, we may be required to delay, limit, or terminate our business operations and may lose our Nasdaq listing.
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 Quarterly Report,
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On June 4, 2025, the Company issued 75,000 restricted shares of common stock, at a price of $3.02 per share, to Force Family Network pursuant to a contract to provide investor relations services.
On June 16, 2024, the Company issued 4,636 restricted shares of common stock, at a price of $3.46 per share, to Donohoe Advisory Services as payment for services rendered related to the Company’s Nasdaq Initial Listing Application.
On June 24, 2025, the Company sold 86,092 restricted shares of common stock to Jimmy Byrd, at a price of $3.02 per share.
On June 24, 2025, the Company issued 594 shares of restricted common stock to Something Great, at a price of $3.37 per share, as payment for services rendered.
On July 10, 2025, the Company sold 75,000 restricted shares of common stock to KC Global Media Asia LLC, at a price of $3.02 per share.
On July 22, 2025, the Company issued 3,000 restricted shares of common stock to MercTech Holdings at a price of $3.15 per share and 1,000 restricted shares of common stock to Nishant Kapoor at a price of $4.02 per share, both as payment for IT contractor services provided.
On July 27, 2025, the Company issued 15,000 restricted shares of common stock, at a price of $3.97 per share, to Karen Morgan pursuant to a consulting contract related to the development and launch of a dedicated beauty and wellness FAST channel.
On August 1, 2025, the Company issued 20,000 restricted shares of common stock to David Thomas at a price of $3.74 per share pursuant to a contract to provide investor relations services.
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On August 12, 2025, the Company issued 10,000 restricted shares of common stock to Michal Byrd at a price of $3.99 per share pursuant to a contract to provide investor relations services.
On August 18, 2025, the Company issued 20,000 restricted shares of common stock to VIP Meetings at a price of $3.55 per share pursuant to a contract to provide investor relations services.
On August 21, 2025, the Company issued 20,000 restricted shares of common stock to Christopher LaCoursiere at a price of $3.73 per share pursuant to a contract to provide investor relations services.
On August 24, 2025, the Company issued 30,000 restricted shares of common stock to Balencic Consulting at a price of $3.47 per share pursuant to a contract to provide investor relations services.
On August 25, 2025, the Company issued 30,000 restricted shares of common stock to Jimmy Caplan at a price of $3.30 per share pursuant to a contract to provide investor relations services.
On August 29, 2025, the Company issued 36,283 restricted shares of common stock to the holders of the Company’s Series L and M preferred stock as a dividend.
The aforementioned securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and were issued to the respective recipients in transactions exempt from registration under the Securities Act in reliance upon the exemption from registration provided by Section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder. Accordingly, the securities constitute “restricted securities” within the meaning of Rule 144 under the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Rule 10b5-1 Trading Plans
During
the three months ended August 31, 2025, none of our directors or officers entered into,
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ITEM 6. EXHIBITS.
| * | Filed herewith. |
| ** | Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
| *** | The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document. |
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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, thereunto duly authorized.
| NEXTTRIP, INC. | ||
| October 15, 2025 | By: | /s/ William Kerby |
| William Kerby | ||
Chief Executive Officer (Principal Executive Officer) | ||
| October 15, 2025 | By: | /s/ Frank Orzechowski |
| Frank Orzechowski | ||
Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | ||
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Exhibit 4.1
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
WARRANT
| Warrant Shares: 90,000 | Issuance Date: August 20, 2025 |
THIS WARRANT (the “Warrant”) certifies that, for value received, Alumni Capital LP or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the 20th of August (the “Initial Issuance Date”) and on or prior to the close of business on the five (5) year anniversary of the Initial Issuance Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from NextTrip, Inc., a Nevada corporation (the “Company”), up to 90,000 shares of the Company’s Common Stock (“Warrant Shares”). The purchase price of one Warrant Share under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Stock Purchase Agreement (the “Purchase Agreement”) dated 20th of August, 2025, among the Company and the Holder.
For purposes of this Warrant, the following terms shall have the following meanings:
“Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.
“Approved Stock Plan” means any employee benefit plan or agreement which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and Options may be issued to any employee, officer, consultant, or director for services provided to the Company in their capacity as such.
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“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States, or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Common Stock” means the Common Stock of the Company.
“Convertible Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.
“Excluded Securities” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any shares issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities or to extend the term of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith, and provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities; and (d) up to $10 million of securities in a financing transaction for which the securities are issued in restricted form with no registration rights.
“Market Price” means as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day.
“Options” means any rights, warrants, or options to subscribe for, purchase, or otherwise acquire shares of Common Stock or Convertible Securities.
“Stockholder Approval” means the approval required by the applicable rules and regulations of the NASDAQ Capital Market (or any successor entity) from the stockholders of the Company of the provisions of Section 3(b) of this Warrant in order for such provisions to become effective by their terms and to be in compliance with such applicable rules and regulations of the NASDAQ Capital Market (or any successor entity).
“Trading Day” means a day on which the shares of Common Stock are traded on the Trading Market; provided, however, that in the event that the shares of Common Stock are not listed or quoted on the Trading Market, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York or State of Delaware are authorized or required by law or other government action to close.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, or the OTC Markets QB Tier (or any successors to any of the foregoing).
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Section 2. Exercise.
a) Exercise of Warrants. Exercise of the purchase rights for Warrant Shares represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Issuance Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed Notice of Exercise in the form annexed hereto as Exhibit A (which may be delivered in a .PDF format via electronic mail pursuant to the notice provisions set forth in the Purchase Agreement). Within two (2) Trading Days of the date said Notice of Exercise is delivered to the Company (or within three (3) Trading Days of the date said Notice of Exercise is delivered to the Company if the Notice of Exercise is received after 12 p.m. EST on such day), the Company shall have received payment of the aggregate Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank, unless such exercise is made pursuant to the cashless exercise procedure specified in Section 2(c) below (if available). No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. The Company shall be entitled to conclusively assume the genuineness of any signature on any Notice of Exercise delivered to the Company pursuant to this Section 2(a), the legal capacity and competency of all natural persons signing any Notice of Exercise so delivered, the authenticity of any Notice of Exercise so delivered, the conformity to an authentic original of any Notice of Exercise so delivered as certified, authenticated, conformed, photostatic, facsimile, or electronic and the authenticity of the original of such Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases, and the Company shall be entitled to conclusively assume that its records of the number of Warrant Shares purchased and the date of such purchases are accurate, absent actual notice to the contrary. The Company shall deliver any objection to any Notice of Exercise within two (2) Business Days of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
| b) | Exercise Price. The exercise price per Warrant Share shall be $4.00, subject to adjustment hereunder (the “Exercise Price”). |
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c) Cashless Exercise. If at any time ninety (90) days after the date of the Initial Issuance Date, there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
| (A) | = | the Market Price (at the date of such calculation) |
| (B) | = | the Exercise Price of this Warrant, as adjusted hereunder; and |
| (X) | = | the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
Assuming (i) the Holder is not an Affiliate of the Company, and (ii) all of the applicable conditions of Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”) with respect to Holder and the Warrant Shares are met in the case of such a cashless exercise, the Company agrees that the Company will use its best efforts to cause the removal of the legend from such Warrant Shares (including by delivering an opinion of the Company’s counsel to the Company’s transfer agent at its own expense to ensure the foregoing), and the Company agrees that the Holder is under no obligation to sell the Warrant Shares issuable upon the exercise of the Warrant prior to removing the legend. The Company expressly acknowledges that Rule 144(d)(3)(ii), as currently in effect, provides that Warrant Shares issued solely upon a cashless exercise shall be deemed to have been acquired at the same time as the Warrant. The Company agrees not to take any position contrary to this Section 2(c).
| d) | Mechanics of Exercise. |
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Company’s transfer agent (the “Transfer Agent”) to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is one (1) Trading Day after the later of (A) the delivery to the Company of the Notice of Exercise provided that such Notice of Exercise is received by 12 p.m. EST and two (2) Trading Days for any Notice of Exercise received after 12 p.m. EST, and (B) the Company’s receipt of payment of the aggregate Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank, unless such exercise is made pursuant to the cashless exercise procedure specified in Section 2(c) (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such Warrant Shares, having been paid. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $5 per Trading Day (increasing to $10 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.
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ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If the Holder fails to make payment of the aggregate Exercise Price of the Warrant Shares pursuant to a Notice of Exercise within two (2) Trading Days of the date said Notice of Exercise is delivered to the Company (or within three (3) Trading Days of the date said Notice of Exercise is delivered to the Company if the Notice of Exercise is received after 12 p.m. EST on such day) by wire transfer or cashier’s check drawn on a United States bank, then the Company will have the right to rescind such exercise, unless such exercise is made pursuant to the cashless exercise procedure specified in Section 2(c). If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
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v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
vi. Charges, Taxes, and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all fees charged by the Transfer Agent, including any fees assessed to the Transfer Agent by Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day processing of any Notice of Exercise and for same-day electronic delivery of the Warrant Shares.
vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
e) Holder’s Exercise Limitations. To the extent the exercise of any portion of this Warrant requires the Company to receive the approval of the Company’s stockholders pursuant to NASDAQ Capital Market Listing Rules, the Company shall not effect such exercise of this Warrant, and a Holder shall not have the right to exercise any such portion of this Warrant, pursuant to Section 2 or otherwise, until such approval has been received by the Company.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
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Notwithstanding anything express or implied in the foregoing provisions of this Section 3(b) to the contrary, (i) no adjustments shall be made, paid or issued under this Section 3(b), and this Section 3(b) shall not become effective or be of any force or effect whatsoever, unless and until the Company has obtained the Stockholder Approval, and (ii) no adjustments shall be made, paid or issued under this Section 3(b) at any time (including, without limitation, at any time after the Company has obtained Stockholder Approval) in respect of any Excluded Securities, and the provisions of this Section 3(b) that are applicable to a Dilutive Issuance after the Company has obtained Stockholder Approval shall not be applicable to any Excluded Securities.
b) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to Section 3(a), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein).
c) Notice. The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.
d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of more than 50% of the outstanding Common Stock or more than 50% of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization, or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock or more than 50% of the voting power of the common equity of the Company (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, the Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
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e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
| f) | Notice to Holder. |
i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail or deliver via electronic mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights, or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Issuance Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
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c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
d) Transfer Restrictions. Subject to any limitations imposed by applicable law, this Warrant may be offered for sale, sold, transferred, or assigned without the consent of the Company.
e) Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.
Section 5. Miscellaneous.
a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i).
b) Loss, Theft, Destruction, or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
d) Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant (the “Required Reserve Amount”). The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid, and nonassessable and free from all taxes, liens, and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
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e) Transfer Agent Instructions. The Company covenants and agrees that it will, at all times during the period the Warrant is outstanding, maintain a duly qualified independent Transfer Agent. The Company represents and covenants that, within one (1) day from the Initial Issuance Date, it will either (i) issue irrevocable instructions to its current Transfer Agent (and each Transfer Agent appointed thereafter) to issue certificates, registered in the name of the Holder or its nominee, for the Warrant Shares in such amounts as specified from time to time by the Holder to the Company upon exercise of this Warrant in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”), or (ii) appoint a new Transfer Agent, at which time the Company (a) shall provide a copy of its agreement with the new Transfer Agent to the Holder, and (b) issue Irrevocable Transfer Agent Instructions to the new Transfer Agent. Such Irrevocable Transfer Agent Instructions shall be in a form acceptable to the Holder and shall include a provision to irrevocably reserve the Required Reserve Amount. The Irrevocable Transfer Agent Instructions shall be signed by the Company’s Transfer Agent as of the date of the Initial Issuance Date or by the New Transfer Agent, as applicable, and by the Company. The Company warrants that, (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(e), and stop transfer instructions to give effect to Section 5(g) (prior to registration of the Warrant Shares under the Securities Act or the date on which the Warrant Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its Transfer Agent and that the Warrant Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Warrant and the Purchase Agreement, (ii) it will not direct its Transfer Agent not to transfer or delay, impair, and/or hinder its Transfer Agent in transferring (or issuing)(electronically or in certificated form) any certificate for Warrant Shares to be issued to the Holder upon exercise of or otherwise pursuant to this Warrant as and when required by this Warrant and the Purchase Agreement, and (iii) it will not fail to remove (or direct its Transfer Agent not to remove or impair, delay, and/or hinder its Transfer Agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Warrant Shares issued to the Holder upon exercise of or otherwise pursuant to this Warrant as and when required by this Warrant and the Purchase Agreement. Nothing in this Section shall affect in any way the Holder’s obligations to comply with all applicable prospectus delivery requirements, if any, upon resale of the Warrant Shares. If a Holder provides the Company, at the cost of the Holder, with an opinion of counsel in form, substance, and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Warrant Shares may be made without registration under the Securities Act and such sale or transfer is effected, the Company shall permit the transfer, and, in the case of the Warrant Shares, promptly instruct its Transfer Agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Holder. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(e) may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.
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f) Jurisdiction. All questions concerning the construction, validity, enforcement, and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.
g) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.
h) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers, or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
i) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
j) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
k) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages may not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
l) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
m) Amendment. This Warrant (other than Section 2(e)) may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
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n) Severability. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
o) Headings. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
p) Governing Law. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation, and performance of this Warrant shall be governed by, the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action, or proceeding by mailing a copy thereof to the Company at the address set forth in the Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.
q) Jurisdiction and Venue. Each party hereby irrevocably submits that any dispute, controversy or claim arising out of or relating to this Warrant, shall be submitted to the exclusive jurisdiction of the Chancery Court of the State of Delaware and the United States District Court for the District of Delaware. Each party hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under the Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS WARRANT. The parties agree that all dispute resolution proceedings in accordance with this Section 5(o) may be conducted in a virtual setting.
********************
(Signature Page Follows)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
| NEXTTRIP, INC. | ||
| By: | /s/ William Kerby | |
| Name: | William Kerby | |
| Title: | Chief Executive Officer | |
[Signature Page to Warrant]
EXHIBIT A
NOTICE OF EXERCISE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
NEXTTRIP, INC.
The undersigned holder hereby exercises the right to purchase __________of the shares of Common Stock (“Warrant Shares”) of NextTrip, Inc., a Nevada corporation (the “Company”), evidenced by the Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
____________a “Cash Exercise” with respect to _________Warrant Shares; and/or
____________ a “Cashless Exercise” with respect to _________Warrant Shares.
2. Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $ __________to the Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to Holder, or its designee or agent as specified below, ____________ Warrant Shares in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
☐ Check here if requesting delivery as a certificate to the following name and to the following address:
| Issue to: | ||
☐ Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
| DTC Participant: | ||
| DTC Number: | ||
| Account Number: |
| Date: _______________ ___, | |
| Name of Registered Holder |
| By: | ||
| Name: | ||
| Title: |
| Tax ID: | ||
| Facsimile: | ||
| E-mail Address: |
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
| Name: | (Please Print) |
| Address: | (Please Print) |
| Dated: ________________ ___, _____ | |
| Holder’s Signature: | |
| Holder’s Address: |
Exhibit 31.1
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, William Kerby, certify that:
1. I have reviewed this quarterly report on Form 10-Q of NextTrip, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: October 15, 2025
| By: | /s/ William Kerby | |
| Name: | William Kerby | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Frank Orzechowski, certify that:
1. I have reviewed this quarterly report on Form 10-Q of NextTrip, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: October 15, 2025
| By: | /s/ Frank Orzechowski | |
| Name: | Frank Orzechowski | |
| Title: | Chief Financial Officer, Treasurer (Principal Financial and Accounting Officer) |
Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, William Kerby, the Chief Executive Officer, and Frank Orzechowski, the Chief Financial Officer, of NextTrip, Inc. (the “Company”), hereby certify, that, to their knowledge:
1. The Quarterly Report on Form 10-Q for the quarter ended August 31, 2025 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ William Kerby | /s/ Frank Orzechowski | |
| William Kerby | Frank Orzechowski | |
Chief Executive Officer (Principal Executive Officer) |
Chief Financial Officer, Treasurer (Principal Financial and Accounting Officer) | |
| October 15, 2025 | October 15, 2025 |