NextTrip, Inc. 10-Q

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 December 31, 2022 filed with the SEC on March 30, 2023, as well as the following updated Risk Factor: We have curtailed certain business activities pending the completion of the Divergent and NextTrip transactions. As of September 30, 2023, we had cash on hand of $556,087, and on October 13, 2023, we raised an additional $772,468 in net proceeds from the sale of common stock pursuant to our ATM Agreement. With these additional proceeds, the Company estimates that it has sufficient cash and working capital to fund its scaled-back operations as described below pending the completion our asset sale with Divergent Technologies, Inc. and our acquisition of NextTrip Holdings, Inc., or through March 2024. The Company reduced its employee headcount, and discontinued product development activities for the time being to ensure lowered expenses. The Company is continuing to operate and support its existing customers who have maintenance agreements and leases in place, supporting new installations in the field, and actively seeking potential sales of the PrintRite3D systems and software to customers who have lease agreements in place, systems on consignment, or otherwise express interest in Sigma’s products available for sale. The Company completed two such sales in the quarter ended September 30, 2023, and believes additional sales are achievable going forward as we progress towards closing both transactions. There is no assurance, however, that we will be able to close either transaction. If we fail to complete the acquisition of NextTrip Holdings, Inc., we intend to proceed with the sale of assets to Divergent Technologies, Inc. and may seek to undertake another strategic transaction, if possible, or the dissolution and liquidation or the bankruptcy of the Company. For these reasons, there is substantial doubt about our ability to continue as a going concern. There is no assurance that we will satisfy NASDAQ’s continued listing requirements, and our common stock could be delisted. On August 17, 2022, The Company received notice from Nasdaq that because our stockholders’ equity as of June 30, 2023 was $2,391,289, we no longer comply with Nasdaq Listing Rule 5550(b)(1), which requires companies listed on the Nasdaq Capital Market to maintain minimum stockholders’ equity of $2,500,000, and do not meet the alternatives of market value of listed securities or net income from continuing operations. The notice stated that under Nasdaq Rules, we have 45 calendar days to submit a plan to regain compliance and that if our plan is accepted, Nasdaq can grant us an extension of up to 180 calendar days from the date of the notice to evidence compliance. On October 2, 2023, the Company submitted its plan to regain compliance to Nasdaq and requested an extension to February 13, 2023 to evidence compliance with the Rule and all other applicable criteria for continued listing on Nasdaq. On October 23, 2023, Nasdaq informed the Company that based on the submission, it had granted the requested extension until February 13, 2024 to demonstrate compliance with the Rule. Nasdaq further informed the Company that if the Company fails to evidence compliance upon filing its periodic report for the quarter ended March 31, 2024 with the SEC and Nasdaq, the Company may be subject to delisting. In such an event, Nasdaq rules would permit us to appeal the decision to reject our proposed compliance plan or any delisting determination to a Nasdaq Hearings Panel. Completion of the Acquisition is part of our plan submitted to Nasdaq to regain compliance with Nasdaq’s minimum stockholders’ equity requirement. If the Acquisition is not completed, it is likely that our common stock would be delisted from Nasdaq If our securities are delisted from Nasdaq, our stockholders could incur material, adverse consequences such as difficulty selling their shares of our common stock and reduced market prices for their shares. Delisting is also likely to have a material, adverse effect on our ability to sell and issue shares of our common stock in order to fund our operations, if any. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None 27 ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable.