Item 2. Management’s Discussion and Analysis
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 May 31, 2026 (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, 2026 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 1560 Sawgrass Corporate Parkway, Suite 400, Sunrise Florida 33323, 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.
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.
35
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.
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.
36
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.
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 transaction 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.
37
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.
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.
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.
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.
38
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.
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.
Software
Development Costs
The
Company capitalizes internal software development costs subsequent to establishing technological feasibility of a software application
in accordance with guidelines established by “ASC 985-20-25” Accounting for the Costs of Software to Be Sold, Leased, or
Otherwise Marketed, requiring certain software development costs to be capitalized upon the establishment of technological feasibility.
The establishment of technological feasibility and the ongoing assessment of the recoverability of these costs require considerable judgment
by management with respect to certain external factors such as anticipated future revenue, estimated economic life, and changes in software
and hardware technologies. Amortization of the capitalized software development costs begins when the product is available for general
release to customers. Capitalized costs are amortized based on the straight-line method over the remaining estimated economic life of
the product.
Impairment
of Intangible Assets
In
accordance with ASC 350-30-65 “Goodwill and Other Intangible Assets”, the Company assesses the impairment of identifiable
intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors it considers
important, which could trigger an impairment review include the following:
1.
Significant underperformance compared to historical or projected future operating results;
2.
Significant changes in the manner or use of the acquired assets or the strategy for the overall business; and
3.
Significant negative industry or economic trends.
When
the Company determines that the carrying value of an intangible asset may not be recoverable based upon the existence of one or more
of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows,
the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using
a discount rate determined by management to be commensurate with the risk inherent to the current business model. Significant management
judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. Intangible assets that have
finite useful lives are amortized over their useful lives.
39
Segments
Segment
reporting is considered a critical accounting policy because it requires management to exercise judgment in identifying operating segments,
determining how those segments are aggregated into reportable segments, and determining the information reviewed by our Chief Operating
Decision Maker (“CODM”) for purposes of allocating resources and assessing performance. Our determination of reportable segments
is based on multiple factors, including the nature of the products and services offered, the types of customers served, the economic
characteristics of each business, and the manner in which financial information is reviewed by our CODM. Our CODM is our Chief Executive
Officer.
In
response to acquisitions and expanded business activities, during the third quarter of fiscal year 2026, our CODM requested changes in
the information that he regularly reviews for purposes of allocating resources and assessing performance. This change was driven primarily
by acquisitions completed during fiscal year 2026, including FSA and TA Pipeline, which expanded our travel-related operations, and JOURNY.tv,
which expanded our media operations. As a result of these changes, we updated our internal reporting structure and, beginning in the
third quarter of fiscal year 2026, we began reporting our financial performance based on two reportable segments: Travel and Media.
Our
Travel segment provides travelers with a full range of travel services through our NXT2.0 booking engine, which offers extensive inventory
and a platform for curating personalized experiences and efficient trip planning and booking. In addition, Five Star Alliance provides
luxury and cruise offerings, and TA Pipeline provides a group-travel agency platform for conferences, conventions, weddings, and affinity
groups. Our Media segment consists of JOURNY.tv, (our owned global travel media network, into which we are integrating the GoUSA TV content
library and distribution assets acquired from Brand USA in February 2026), our joint venture with KC Global Media for international expansion
across India, Southeast Asia, Africa, and Australia/New Zealand, and Travel Magazine, our editorial travel content platform. We expect
combined JOURNY.tv and GoUSA TV assets to support media distribution reaching approximately 250 million viewers globally in 2026 across
FAST, OTT, connected TV, mobile, and digital platforms.
Our
primary measure of segment performance is Operating Income (Loss). Operating Income (Loss) for the Travel and Media segments includes
direct expenses attributable to each segment, as well as allocations of certain expenses, primarily salaries and benefits, third-party
contractors, sales and marketing, and technology costs. These allocations are based primarily on transaction volumes and other usage-based
metrics. Shared corporate expenses, including accounting, human resources, certain information technology costs, legal, audit, investor
relations, directors’ compensation, stock-based compensation expense, amortization of intangible assets, and corporate development
costs, are not allocated to the reportable segments and are included within Corporate.
Because
the Travel and Media segments were newly formed during fiscal year 2026, the financial reporting framework supporting segment reporting
continues to evolve. While the CODM currently uses Operating Income (Loss) in the monthly financial review process to assess segment
performance, he is continuing to review and refine the nature, level of detail, and frequency of the financial information provided in
order to determine how it will ultimately be used in decision-making, including resource allocation, budgeting, forecasting, and performance
evaluation. As the segments mature, the metrics reviewed by the CODM, the cost allocation methodologies applied, and the presentation
of segment information may change to better reflect how the business is managed.
The
CODM does not regularly review asset information by segment, and as a result, depreciation and amortization are excluded from the segment
performance measure. Accordingly, we do not report segment assets, as such information would not be meaningful.
The
change in reportable segments did not result from a change in accounting principle, but rather reflects a change in internal reporting
and management approach following fiscal year 2026 acquisitions and expanded business activities. Segment information for prior periods
has been recast to conform to the current presentation to provide consistency and comparability across periods. Any future refinements
to segment reporting will reflect changes in management’s internal reporting and decision-making processes rather than changes
in accounting principles. When applicable, we will disclose such changes and recast prior-period segment information as necessary to
maintain comparability.
40
Business
Overview
NextTrip,
Inc. (the “Company,” “NextTrip,” “we,” “us” and “our”) is a technology-forward
travel and media company operating at the intersection of premium content and travel commerce. We believe the travel industry is undergoing
a structural shift toward video-led discovery, personalized planning, and seamless booking experiences, where consumers increasingly
move from inspiration to transaction within connected digital environments. Our strategy is designed to capture this shift.
NextTrip
combines premium travel content, global audience reach, proprietary booking technology, and concierge-supported travel services into
a unified ecosystem designed to guide consumers across the full travel journey—from inspiration and discovery to planning, booking,
and servicing.
We
market our travel services through several core brands, including NextTrip Vacations (direct-to-consumer leisure travel), Five Star Alliance
(luxury hotel and cruise bookings), and TA Pipeline (groups travel). Our specialty platforms include PayDlay (a deferred payment booking
option), the Groups Platform (for destination weddings, conferences, and conventions), and the Travel Agent Platform. Our Media segment
properties—JOURNY.tv, GoUSA TV content and platforms, the KCGM Joint Venture across Southeast Asia, and Travel Magazine—provide
destination content designed to drive high-intention traffic into our Travel segment booking platforms and generate independent advertising
revenue. Through our recent acquisition of YADA Commerce, Inc., we gained a strategic creator-commerce platform capable of driving audience
acquisition, creator engagement, entertainment experiences, and travel transactions across the broader NextTrip ecosystem.
Because
we are at an early stage of commercial development and have only nominal revenues to date, our ability to implement our business plan
depends on our ability to successfully expand our supplier relationships, attract customers, and secure adequate capital to fund marketing
and future product development. There can be no assurance that we will be able to do so.
Current
Scale and Going Concern
We
are in the early 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 the fiscal year ended February 28, 2026 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.
Our
Integrated Content-to-Commerce Platform
Our
platform is designed to connect four core elements into a seamless pathway from discovery to confirmed booking:
Content
and Inspiration – travel programming, editorial content, and long and short-form destination storytelling across our Media segment
platforms, including JOURNY.tv, GoUSA TV content and platforms, the KCGM Joint Venture across Southeast Asia, and Travel Magazine.
Discovery
and Planning – editorial content, Agentic AI-powered personalization tools, and search capabilities designed to guide travel decisions
and connect audience engagement with booking intent, including through Travel Magazine Pro in our Travel segment.
Booking
and Commerce – direct transaction capabilities through the NXT2.0 platform and affiliated booking platforms within our Travel segment,
supporting a broad range of travel categories including leisure, luxury, cruise, group, and business travel.
41
Service
and Support – concierge and call center infrastructure supporting higher-value travel experiences and complex booking needs across
our Travel segment.
This
integrated approach is intended to create a seamless pathway we describe as “Watch. Scan. Book. Go.”, enabling consumers
to move from inspiration through our Media segment directly to booking discounted packages mirroring the watched Travel segment. We believe
this model reduces customer acquisition costs over time by leveraging owned media audiences while also generating independent advertising
revenue from our Media segment.
Business
Segments
We
operate and report our business in two segments: (1) Travel and (2) Media.
Travel
Segment
Our
Travel segment encompasses our travel booking and commerce operations. This segment includes our proprietary NXT2.0 booking platform
and all booking-oriented brands and products: NextTrip Vacations, Five Star Alliance, TA Pipeline, JournyGO, and Travel Magazine Pro™.
The Travel segment generates revenue primarily through commissions, markups, and service fees on travel bookings, as well as advisor-driven
commissions and attribution-based fees through Travel Magazine Pro™.
NXT2.0
– Core Booking Platform
At
the core of our Travel segment is our proprietary NXT2.0 travel booking engine, which powers several websites, including nexttrip.com
and fivestaralliance.com, as well as our Groups Platform and Travel Agent Platform. NXT2.0 supports direct-to-consumer and advisor-assisted
booking across leisure, luxury, cruise, group, and business travel verticals. We serve both leisure and business travelers by offering
access to travel blogs, videos, and concierge assistance to aid in planning travel, coupled with our booking platform for the direct
purchase of flights, hotels, vacation homes, cruises, tours, and other travel products.
Five
Star Alliance
Five
Star Alliance is a premier luxury travel agency and a wholly owned subsidiary of the Company, acquired in April 2025. Founded in 2004,
Five Star Alliance offers a curated collection of over 5,000 five-star and luxury hotels and resorts worldwide, with an industry-leading
4.9-star Trustpilot rating and over 400,000 monthly site visitors. Five Star Alliance offers personalized recommendations, high-end travel
solutions, a proprietary booking engine, and established relationships with premium travel providers, and generates revenue primarily
through commission-based bookings. See “Recent Developments - Acquisition of Five Star Alliance.”
TA
Pipeline
TA
Pipeline is a premier group travel and Meetings, Incentives, Conferences and Exhibitions (“MICE”) platform and a wholly owned
subsidiary of the Company, acquired in August 2025. TA Pipeline has established itself as a leading group-travel agency platform with
deep expertise in delivering end-to-end solutions for conferences, conventions, destination weddings, and affinity groups, often servicing
groups ranging from 50 to 5,000 travelers. TA Pipeline has strong relationships with suppliers, planners, and affinity partners, and
its integration into the NXT2.0 ecosystem and PayDlay financing tool is designed to enhance conversion rates and drive incremental travel
bookings. See “Recent Developments - Acquisition of TA Pipeline.”
JournyGO
On
March 31, 2026, the Company launched JournyGO, our next-generation, agentic AI-powered consumer engagement and booking ecosystem. JournyGO
is the commercial activation layer of our content-to-commerce strategy and is reported within our Travel segment because its primary
function is to convert viewer engagement into confirmed travel bookings. JournyGO integrates immersive travel video (delivered through
our Media segment’s JOURNY.tv platform), our proprietary Promethean interactive overlay technology, dynamic travel packaging, and
agentic AI assistance, supported by live Travel Specialists when needed to seamlessly move viewers from inspiration to confirmed travel
bookings.
42
The
Promethean platform, licensed on a perpetual basis, enables contextual advertisements and booking calls-to-action to be embedded directly
within streaming video content, allowing users to initiate a booking without leaving the viewing experience. JournyGO also includes JOURNY
mobile applications for iPhone and Android, as well as dedicated connected TV apps. Using artificial intelligence, JournyGO is designed
to personalize content recommendations, convert editorial content into video, and enable users to create custom travel channels aligned
with their interests. See “Recent Developments - Launch of JournyGO.”
Travel
Magazine Pro
Travel
Magazine Pro (TravelMagazine.com) is our premium digital editorial, advisor engagement, and travel commerce platform within our Travel
segment, launched as the next evolution of Travel Magazine 2.0. Travel Magazine Pro is designed to operate as a strategic mid-funnel
bridge between the inspirational audience reach generated by our Media segment and the transaction capabilities of our Travel segment,
helping convert travel interest into measurable booking activity across the NextTrip ecosystem.
The
platform features destination-focused editorial content, curated travel guides, hotel and resort recommendations, cruise and experiential
travel highlights, travel planning resources, and influencer-driven content intended to engage high-intent leisure travelers during the
consideration and planning phase of the customer journey. Integrated booking pathways and affiliate links connect users to our travel
platforms and supplier partners, creating a seamless path from inspiration to search and transaction.
Travel
Magazine Pro is also being developed to support travel advisors and distribution partners through content-sharing tools, lead attribution
capabilities, and white-label promotional solutions that enable advisors to market premium travel offerings while participating in resulting
booking revenues. In addition, the platform is expected to include “My Bucket List,” a social travel planning feature that
will allow travelers to build, organize, and share personalized travel wish lists enhanced by booking functionality, destination insights,
and curated recommendations.
Revenue
generated through Travel Magazine Pro is expected to include affiliate booking commissions, advertising sales, sponsored placements,
premium editorial partnerships, lead generation fees, and advisor-related transaction revenue. See “Recent Developments—Launch
of Travel Magazine Pro.”
Media
Segment
Our
Media segment encompasses our content creation, audience development, media distribution, and advertising monetization operations. This
segment includes JOURNY.tv (incorporating GoUSA TV content) and Travel Magazine, our editorial travel content platform. The Media segment
generates revenue primarily through advertising, sponsorships, branded content, and destination marketing programs. In addition to direct
monetization, the Media segment functions as a demand-generation engine for the Travel segment, enabling NextTrip to engage travel audiences
at scale and reduce reliance on third-party marketing channels.
JOURNY.tv
(Including GoUSA TV Integration)
JOURNY.tv
is our owned global travel media network, providing premium travel programming across free ad-supported streaming television (“FAST”),
over-the-top (“OTT”), connected TV, and digital platforms. JOURNY.tv had an estimated audience of approximately 17 million
travel enthusiasts at the time of acquisition by NextTrip, and operates through key platform partnerships, including Samsung TV Plus
and Plex.
In
February 2026, we acquired original content, brand rights, and distribution assets of GoUSA TV from Brand USA (The Corporation for Travel
Promotion). GoUSA TV is a travel streaming channel, reaching an estimated 200+ million viewers globally across connected TV, mobile,
and digital platforms, including Samsung TV Plus, LG Channels, Plex, Titan OS, and TCL International. Rather than operating GoUSA TV
as a standalone channel, we are integrating its U.S.-focused travel content library and distribution infrastructure into JOURNY.tv to
enhance scale, content depth, and advertiser relevance. Combined, JOURNY.tv and GoUSA TV assets are expected to support media distribution
reaching approximately 250 million viewers globally in 2026 across FAST, OTT, connected TV, mobile, and digital platforms. See “Recent
Developments—GoUSA TV Asset Purchase.”
43
In
July 2025, we entered into a joint venture with KC Global Media to accelerate the international expansion of JOURNY.tv into India, Southeast
Asia, Africa and Australia/New Zealand, targeting new regional distribution partnerships and advertising opportunities. See “Recent
Developments—KC Global Media Joint Venture.”
Travel
Magazine
Travel
Magazine (TravelMagazine.com) is our editorial travel content platform within our Media segment. It is an online travel publication that
provides articles, guides, destination inspiration, hotel and restaurant recommendations, and general travel advice. Its audience includes
both casual vacationers and more seasoned travelers seeking ideas and information for their next trip. Travel Magazine functions primarily
as a content and audience platform within our Media segment, generating revenue through advertising and sponsored content, while also
directing engaged readers to our owned booking channels, including NextTrip and Five Star Alliance, as well as to select third-party
partners through affiliate relationships.
The
media team benefits from a range of strategic partners driving advertising revenue potential, including Leap Media Group (over 35 years
of TV advertising and media planning experience), Travel Spike (programmatic and direct travel advertising sales), Magnite (programmatic
advertising), and Blue Fysh Holdings (digital out-of-home media solutions across North America). See “Recent Developments—Blue
Fysh Share Exchange.”
NXT2.0
– Our Integrated Travel Booking Platform
Development
of the Platform
Prior
to the COVID-19 pandemic, NextTrip (then known as Monaker Group) operated a travel business focused on the sale of vacation rentals and
alternative lodging rentals (“ALRs”) through its proprietary booking engine (NXT1.0). In June 2022, NextTrip acquired the
Bookit.com booking engine, including its customer database, destination content, source code, and approximately 250 third-party travel
supplier Application Programming Interface (“API”) relationships. The Bookit.com platform had previously powered a well-established
online leisure travel agent generating over $400 million in annual sales as recently as 2019 (pre-pandemic). We launched the NXT2.0 platform
in May 2023 and have since scaled to over four million hotel properties, vacation rental homes, and cruise products globally.
Travel
Products and Services
Inventory
and product offerings on our platform consist chiefly of: (1) direct contracts, which are negotiated directly with the travel provider
and generally generate higher gross margins; and (2) third-party API content, which is lower margin but significantly broadens inventory
and supports the integration of specialty products, leading to cross-selling and additional revenue opportunities.
Our
Direct Contract Strategy
Our
initial focus was to negotiate direct connectivity and fixed base pricing contracts with hotels and travel suppliers and to integrate
those products into NXT2.0. This allows us to set our own pricing and control our margins for leisure and vacation travel products and
negotiate and run co-op marketing. This flexibility affords us the opportunity to run competitive specials and adjust pricing within
our marketplace.
Our
Inventory Expansion and API Strategy
To
supplement our higher-margin direct inventory and support our specialty platforms, we have integrated a series of third-party API relationships
into NXT2.0. Major suppliers include Expedia (worldwide hotel product), Nuitée (hotel and vacation rental homes), Global Distribution
Systems (luxury hotels and activities), and Signature Travel Network via Five Star Alliance (all major cruise lines). These established
suppliers provide significant additional content and product depth in our booking engine, giving NextTrip comprehensive global leisure
travel inventory coverage.
44
Core
Product Offerings
NextTrip’s
Travel segment offerings span leisure, luxury, cruise, group, and business travel. Key product offerings include:
NextTrip
Vacations – Our core leisure platform, powered by NXT2.0, delivering seamless booking and customizable travel options across
airlines, hotels, cruises, ground activities, and more.
Five
Star Alliance – A luxury travel platform providing access to over 5,000 five-star hotels and resorts worldwide with personalized
concierge services and an industry-leading 4.9-star Trustpilot rating.
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 including transfers, pre- and post-cruise stays, and expert travel
support, launched March 27, 2025.
TA
Pipeline – A premier group travel and MICE platform supporting destination weddings, conferences, conventions, and affinity
group travel for groups ranging from 50 to 5,000 travelers.
Travel
Magazine Pro – Our premium digital editorial, advisor engagement, and travel commerce platform designed for travel agencies,
advisors, and agents to compete online and offline.
Groups
Platform – A solution for complex travel needs such as conferences, conventions, and destination weddings, with several group
bookings completed within the first 60 days of launch from leads generated by Five Star Alliance.
NXT2.0
Platform Features
Existing
Features
Our
marketplace at nexttrip.com offers tools for browsing and comparing flights, hotels, tours, cruises, and activities. We allow travelers
to defer payments on select vacation packages with our proprietary PayDlay program, which allows travelers to purchase travel with a
small deposit and make subsequent payments between purchase and the week before travel, with no interest charged. Registered NextTrip
travelers can manage bookings, receive updates on special offers, and subscribe to newsletters. Security is a priority, with rigorous
content screening and Payment Card Industry (“PCI”) compliance to safeguard customer information.
NXT2.0
equips travelers with a seamlessly integrated planning and booking ecosystem. Within a personalized profile, users can explore a curated
library of videos and editorial content tailored to their interests, earmark preferred destinations and activities, and engage a dedicated
concierge team for travel planning support. Travelers may transact digitally through the platform’s booking engine or speak directly
with a call-center specialist, all while utilizing proprietary payment tools such as PayDlay.
Technology
and Infrastructure
Our
websites are hosted using cloud services distributed globally across multiple regions, designed to manage increases in traffic through
scalable computing power without requiring software changes. Our cloud services provide scalable and redundant Internet connectivity
as well as redundant power and cooling. We use industry-standard security methods to ensure the integrity of our networks and protection
of confidential data. Access to NextTrip’s networks and the servers and databases on which confidential data is stored is protected
by industry-standard firewall and encryption technology. Physical access to our servers and related equipment is secured by limiting
access to the data center to operations personnel only.
Promethean
Interactive Platform
Promethean
is our proprietary interactive video overlay platform, licensed on a perpetual basis, which drives advertising revenue and facilitates
the connection between our Media and Travel segments. We are integrating this platform into JournyGO’s video content with interactive
overlays that allow users to initiate travel bookings directly from streaming content through contextual calls-to-action without interrupting
the viewing experience. Promethean is the key technology enabling our “Watch. Scan. Book. Go.” ecosystem, providing the link
through which JOURNY.tv viewers in our Media segment can transact within our Travel segment in real time.
45
Revenue
Strategy and Development of an Integrated Travel and Media Ecosystem
NextTrip’s
revenue strategy is built on two complementary and mutually reinforcing revenue streams generated across our two operating segments.
Travel
Segment Revenue
We
generate Travel segment revenue through commissions, markups, and service fees on travel bookings across hotels, vacation rentals, cruises,
packages, and related travel services. 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 the Company and the product supplier (as is the case with the majority of NextTrip’s
products), which allows us to set our own retail pricing. Commission-based travel products are generally lower margin than directly negotiated
travel products. Our strategy emphasizes higher-value travel segments, including luxury travel, cruise, and group travel, which we believe
offer higher transaction values, repeat business opportunities, and enhanced service economics. Travel Magazine Pro also contributes
Travel segment revenue through affiliate commissions and sponsored booking content.
Media
Segment Revenue
We
generate Media segment revenue through advertising, sponsorships, branded content, and destination marketing programs across JOURNY.tv
and Travel Magazine. As the number of viewers and users grows, it drives the advertising rates the Company can charge third parties to
promote travel products and services to our audience. Beyond generating direct advertising dollars, our growing audience provides additional
opportunities for NextTrip to promote its own Travel segment products to highly targeted viewers, reducing our dependence on external
marketing channels.
The
deployment of JournyGO and the Promethean interactive overlay platform is expected to further enhance both segments by converting Media
segment viewership into Travel segment bookings, while simultaneously supporting higher advertising CPMs through demonstrated audience
action rates.
Development
of Integrated Revenue Model
NextTrip
is in the early stages of development and roll out of its comprehensive two-segment model. While the products introduced to date are
now functional and generating nominal revenues, those revenue streams are currently small and variable relative to established travel
industry leaders. Our ability to capitalize on our platforms is constrained by limited funding for marketing programs. The timeline to
complete planned 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 integrated, we believe the model will deliver accelerating revenue growth as
our content-to-commerce strategy targets underserved areas in the travel sector—such as PayDlay, Groups bookings, and the Travel
Agent Platform—not well serviced by the major travel industry leaders.
Recent
Developments
Acquisition
of a Controlling Interest in YADA
On
June 10, 2026, the Company entered into a Stock Purchase Agreement with YADA Commerce Inc. (“YADA”) pursuant to which the
Company acquired a controlling interest in YADA, a fully licensed TikTok Partner Agency and creator-commerce platform focused on influencer
engagement, audience development, digital commerce, and music artist promotional events.
46
Highlights
of the Transaction:
●
Adds
a Fully Licensed TikTok Partner Agency providing access to creator recruitment, audience development, affiliate commerce, livestream
commerce, and creator monetization capabilities.
●
Expands
NextTrip’s Audience Acquisition Engine through access to thousands of creators and billions of aggregate followers across social
media platforms.
●
Launches
NextTrip’s Destination Entertainment & Creator Commerce with 4 destination music events already committed featuring exclusive
artist partnerships, fan experiences, concert travel programs, and creator-led commerce initiatives.
●
Creates
New Revenue Opportunities for our media platform to drive additional advertising, sponsorships, travel bookings, experiential travel,
memberships, gift cards, loyalty programs, and creator commerce.
Through
YADA, the Company gains a strategic creator-commerce platform capable of driving audience acquisition, creator engagement, entertainment
experiences, and travel transactions across the broader NextTrip ecosystem. NextTrip believes the acquisition represents significantly
more than a traditional social media marketing initiative and includes access to pre-booked group travel programs involving several artists
for exclusive concert experiences for super fans in unique destinations and premium resort venues.
Under
the agreement, NextTrip will serve as the travel fulfillment partner for YADA’s music artist promotional events and related fan
experiences. The Company expects to leverage its group travel capabilities through TA Pipeline, luxury travel offerings through Five
Star Alliance, concierge travel services, and proprietary travel inventory available through the NXT2.0 platform to support future event-related
travel programs.
Launch
of JournyGO – Agentic AI-Powered Watch. Scan. Book. Go. Ecosystem
On
March 31, 2026, the Company launched JournyGO, its next-generation agentic AI-powered consumer engagement and booking ecosystem within
the Travel segment. JournyGO integrates immersive travel video (delivered through the Company’s JOURNY.tv Media segment platform),
the Company’s proprietary Promethean interactive overlay technology, dynamic travel packaging, and agentic AI assistance—supported
by live Travel Specialists when needed—to seamlessly move viewers from inspiration to confirmed travel bookings. JournyGO represents
the full commercial activation of our “Watch. Scan. Book. Go.” content-to-commerce strategy and is designed to drive Travel
segment bookings and Media segment advertising revenue directly from streaming content engagement.
Launch
of Travel Magazine Pro ™
The
Company launched Travel Magazine Pro™, a category-defining platform within the Travel segment that reimagines how travel advisors
inspire, engage, and monetize demand in a world increasingly driven by digital discovery and real-time transactions. Travel Magazine
Pro™ equips travel advisors with a vertically integrated platform combining premium media, intelligent CRM, and embedded commerce,
enabling advisors to distribute editorial-quality travel content—destinations, itineraries, and curated journeys—fully embedded
with live, bookable inventory.
The
platform is powered by NextTrip’s connected trip technology and enhanced through licensed technology integrations with Worldia,
enabling dynamic packaging of flights, hotels, and experiences into flexible, real-time itineraries. Travel Magazine Pro™ incorporates
a robust attribution framework that tracks and links advisor-driven engagement to completed bookings across the customer journey, including
delayed or repeat bookings within defined attribution windows, enabling advisors to earn fees and commissions on transactions attributable
to their content and client interactions. Key platform capabilities include seamless in-content booking, dynamic customizable travel
packages, competitive pricing, high-margin commission structures across all travel components including air, and AI-driven personalization.
Travel Magazine Pro™ is now available to travel advisors nationwide.
Launch
of JOURNY App on Apple iOS
The
Company launched the JOURNY App on Apple iOS, expanding direct consumer access to JOURNY.tv travel programming on mobile devices. The
iOS app extends the JournyGO ecosystem to mobile viewers and supports the Company’s Media segment strategy of reaching travel audiences
across connected TV, mobile, and digital platforms.
47
GoUSA
TV Asset Purchase
On
February 2, 2026, NextTrip, Inc. entered into an Asset Purchase Agreement with The Corporation for Travel Promotion, doing business as
“Brand USA” (“Seller”), pursuant to which the Company agreed to purchase select content, brand rights, and distribution
assets (collectively, the “Assets”) of GoUSA TV, a travel streaming platform originally launched to showcase destinations
across the United States. GoUSA TV historically reached an estimated 200+ million viewers globally across connected TV, mobile applications,
and digital platforms, including Samsung TV Plus, LG Channels, Titan OS, and TCL International.
The
aggregate consideration under the Purchase Agreement is $350,000 in cash plus restricted shares of the Company with a value of $350,000
based on the weighted average price of the shares for the twenty consecutive trading days ending on the trading day two trading days
prior to closing. In addition, the Company will pay to Seller a royalty equal to 15% of the Company’s gross advertising revenue
from the exploitation of the acquired content rights during the three-year period beginning on the closing date. The Company has also
agreed, for a three-year period beginning on closing, to pay a royalty of 1% for every $100,000 in destination booking revenue directly
attributed to the acquired content, with a minimum quarterly payment of $30,000.
The
GoUSA TV assets are being integrated into JOURNY.tv within the Media segment. GoUSA TV content serves as a U.S.-focused demand-generation
layer within NextTrip’s broader media-to-commerce ecosystem.
KC
Global Media Joint Venture
In
July 2025, NextTrip entered into a joint venture with KC Global Media, a leading Asian entertainment network founded by former Sony executives,
to accelerate the international expansion of the JOURNY.tv Media segment platform into India, Southeast Asia, and Australia/New Zealand.
This initiative is intended to support regional distribution partnerships, advertising monetization opportunities, and localized content
strategies, while significantly expanding NextTrip’s global audience reach and strengthening top-of-funnel travel demand generation
for the Travel segment.
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 (the “TA Acquisition”). The TA Acquisition closed on August 6, 2025, resulting in TA becoming a wholly-owned
subsidiary of the Company operating within the Travel segment.
Pursuant
to the TA MIPA, as consideration for the TA Acquisition, the Company (i) paid the TA Members an aggregate of $443,168 in cash and (ii)
issued an aggregate of 96,774 restricted shares of Company common stock valued at $300,000, based on a price per share of $3.10. In addition,
the Company shall make an earnout payment equal to five percent (5%) of the net revenues generated by TA during the 12-month period after
the closing date, up to a maximum of $200,000, payable 50% in cash and 50% in restricted shares of Company common stock at $3.10 per
share.
In
addition, in the event that the fair market value of the Company’s common stock is less than $3.10 per share during the applicable
exercise period, each TA Member shall have a limited, one-time option to (i) require the Company to repurchase all or a portion of their
TA acquisition shares at $3.10, (ii) require the Company to issue additional shares to make the aggregate value equal to the original
aggregate value, or (iii) require the Company to pay the difference in cash between the base price and fair market value. The exercise
period commences upon the earlier of the date the shares first become eligible for public resale or the first anniversary of the closing
date.
On February 24, 2026, the former
TA Members delivered a notice exercising the Put Option and demanding that the Company repurchase all 96,774 shares in cash at the $3.10
per share Base Price. The Company declined to honor the exercise, believing the former TA Members are in breach of their obligations under
the TA MIPA. Following unsuccessful discussions between the parties, the Company was notified on July 14, 2026 that the former TA Members
had filed a Demand for Arbitration with the American Arbitration Association in Las Vegas, Nevada, asserting a claim for breach of contract
and seeking damages of not less than $299,999.40, together with attorneys' fees, pre-judgment and post-judgment interest, and arbitration
costs. See Part II, Item 1, “Legal Proceedings.”
The Company believes it has
meritorious defenses and intends to defend the matter vigorously and to pursue available counterclaims. The Company cannot predict the
outcome of the arbitration or reasonably estimate the amount or range of any possible loss at this time. If the matter is ultimately resolved
against the Company, the Company could be required to pay up to approximately $300,000 in cash (exclusive of interest, fees, and costs),
or to issue additional shares of common stock, which could adversely affect the Company's cash position and liquidity. The 96,774 shares
remain classified as mezzanine equity, at a carrying value of $387,000, on the Company's condensed consolidated balance sheet.
48
TA
Pipeline adds a customer base of large group travel organizers, integrates its customer pipeline into NextTrip’s NXT2.0 booking
technology and PayDlay financing tool, and creates cross-media leverage through JOURNY.tv and Travel Magazine Pro.
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. On February 10, 2025, the Company completed
an initial closing, purchasing a 49% ownership stake in FSA for $500,000 in cash plus 161,291 shares of Series O Nonvoting Convertible
Preferred Stock. On April 9, 2025, the Company exercised its option to acquire the remaining 51% of FSA’s membership units for
an additional $500,000 in cash plus 161,291 shares of Series O Preferred Stock, resulting in FSA becoming a wholly-owned subsidiary of
the Company within the Travel segment.
On
April 28, 2025, the parties determined that each of the four performance milestones under the FSA Purchase Agreement had been achieved,
and in satisfaction of those obligations, the Company paid the FSA Members an additional aggregate of $400,000 in cash and issued an
aggregate of 120,967 shares of Series O Preferred. In total, the Company paid aggregate cash consideration of $1,400,000 and issued an
aggregate of 443,549 shares of Series O Preferred to the FSA Members in connection with the acquisition of Five Star Alliance.
Founded
in 2004, Five Star Alliance is a premier luxury travel agency known for its curated collection of over 5,000 five-star hotels and resorts
worldwide, with an industry-leading 4.9-star Trustpilot rating and over 400,000 monthly site visitors. Five Star Alliance offers personalized
recommendations, high-end travel solutions, a proprietary booking engine, and established relationships with premium travel providers.
Blue
Fysh Share Exchange
On
February 24, 2025, the Company and Blue Fysh Holdings Inc. (“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 of the Company
at an issuance price of $5.00 per share. The BF Share Exchange closed on February 28, 2025. Blue Fysh is focused on digital and network
solutions connecting people to brands through thousands of digital installations in diverse environments across North America. The strategic
partnership with Blue Fysh is intended to expand audience reach by integrating JOURNY.tv, Travel Magazine, and NextTrip’s booking
platform with Blue Fysh’s digital out-of-home solutions, increase advertising revenue through combined media assets, and leverage
Blue Fysh’s strategic sales relationships on behalf of NextTrip’s Media segment.
JOURNY.tv
Asset Purchase
On
April 1, 2025, the Company entered into an asset purchase agreement with Ovation LLC (“Ovation”), pursuant to which the Company
purchased assets including trademarks, domains, apps, and certain distribution agreements related to Ovation’s JOURNY.tv business
for $300,000 in cash and 20,000 restricted shares of Company common stock. In connection with the acquisition, the Company and Ovation
also entered into a License Agreement pursuant to which Ovation granted the Company non-exclusive rights to exhibit JOURNY.tv programming
through FAST and Video On Demand channels. The aggregate non-refundable license fee payable over the term of the License Agreement is
$336,801.
NextTrip
Cruise Launch
On
March 27, 2025, NextTrip unveiled NextTrip Cruise, a fully integrated cruise booking engine within the Travel segment 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.
49
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 and as amended on March 3, 2026, 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 : David Jiang (Chair), Stephen Kircher, Jimmy Byrd and Carmen Diges
●
Nominations
& Governance Committee : Andy Kaplan (Chair), David Jiang, and Carmen Diges
Facilities
Our
principal executive office is located at 1560 Sawgrass Corporate Parkway, Suite 400, Sunrise Florida 33323. The lease is on a month-to-month basis, and
can be terminated by either party at any time.
Results
of Operations
Three
Months Ended May 31, 2026 Compared to the Three Months Ended May 31, 2025
Three Months Ended May 31,
Revenue by segment
2026
2025
% Change
Media
$ 40,952
$ -
-
Travel
1,410,783
138,827
916 %
Total Revenue
$ 1,451,735
$ 138,827
946 %
The
increase in revenue of $1,312,908, or 946% for the three months ended May 31, 2026 vs. May 31, 2025 was primarily due to group travel-related
revenues and cruise bookings. In addition, our Media segment generated revenue from direct advertising sales and programmatic revenues.
Our
cost of revenue for the three months ended May 31, 2026 was $1,243,636, as compared to $99,921 for the same period in 2025, an increase
of $1,143,715, or 1,145%. The increase was primarily attributable to the increase in sales from fiscal year 2026 as compared to fiscal
year 2025.
Our
gross margin for the three months ended May 31, 2026 was 14%, as compared to 28% for the same period in 2025. The decline in gross margin
was primarily driven by a shift in the type of revenue we received, as revenue from higher-margin agent (commission) travel bookings
and direct advertising sales declined relative to merchant-of-record travel bookings.
50
Our
total operating expenses for the three months ended May 31, 2026 were $3,121,852, as compared to $4,678,643 for the same period in 2025,
a decrease of $1,556,791, or 33%. The decrease was primarily attributable to stock options granted to former directors and other non-cash
professional services expenses incurred during the first quarter of fiscal year 2026, as further discussed below. Total non-cash expenses,
primarily consisting of stock-based compensation, stock options granted to former directors, common shares issued to third parties for
services, and depreciation and amortization totaled $889,388, or 28% of our operating expenses for the three months ended May 31, 2026,
and $2,980,746, or 64% of our operating expenses for the same period in 2025.
Salary
and benefits costs were $907,401 for the three months ended May 31, 2026, as compared to $696,914 for the same period in 2025, an increase
of $210,487, or 30%. The increase was comprised of: (a) an increase in salaries of $151,043 due to the addition of seven new employees;
(b) an increase in payroll taxes and benefits of $60,752; and (c) an increase due to the revaluation of the SAR liability of $7,453;
partially offset by a decrease in bonus expense of $6,190, and a decrease in commission expense of $2,574.
Stock-based
compensation was ($13,660) for the three months ended May 31, 2026, as compared to $138,325 for the same period in 2025. This decrease
of $151,985, or 110%, was primarily due to options issued in the first quarter of fiscal year 2026, that did not recur in the first quarter
of fiscal year 2027 and a true up of stock-based compensation to reflect the employee portion of payroll taxes.
We
incurred general and administrative costs of $34,626 during the three months ended May 31, 2026, as compared to $30,588 in the same period
in 2025, an increase of $4,038, or 13%. The increase was primarily the result of (a) $7,556 in license and filing fees primarily related
to the renewal of travel licenses; (b) an increase of $5,586 for computers issued to new employees; (c) an increase in telephone expenses
of $1,996; (d) an increase in payroll service fees of $1,889; partially offset by a decrease in travel expenses of $11,486 and a decrease
in rent expenses of $1,503.
We
incurred marketing costs of $134,848 during the three months ended May 31, 2026, as compared to $90,035 during the same period in 2025.
The increase of $44,813, or 50%, was for (a) an increase in contracted services for marketing of $27,468; (b) increased Travel Magazine
expenses of $66,950 aimed at driving traffic and generating business across all of our brands; and (c) an increase in social media expenses
of $17,885 including a social media influencer agency. Partially offsetting the increase was a decrease of $62,500 in fees previously
incurred from a former media advertising firm, and a decrease in advertising and promotional services of $5,050.
Professional
service fees incurred in the three months ended May 31, 2026 were $1,286,371, as compared to $1,149,476 incurred during the same period
in 2025, an increase of $136,895, or 12%. This increase was a result of: (a) an increase in consulting fees of $366,206 due to contracts
for services related to business development, including our media segment; (b) an increase in legal fees of $45,435 due to services related
to various regulatory filings and acquisitions; and (c) an increase in contract labor of $33,165 related to travel and other operations;
partially offset by a decrease in investor relations expenses of $229,093 due to service contracts issued to investor relations firms
in the previous year; a decrease in lending fees of $45,000 related to bridge loan financings during the first quarter of fiscal 2026;
and a decrease in accounting expenses of $33,816 due to the FSA audit in the previous year. Of the total professional service fees of
$1,286,371 for the three months ended May 31, 2026, $552,952, or 43%, was incurred as non-cash expenses, as compared to $632,413, or
55% for the three months ended May 31, 2025.
We
incurred technology costs of $254,728 during the three months ended May 31, 2026, as compared to $321,815 during the same period in 2025.
The decrease of $67,087, or 21%, was primarily attributable to: (a) a decrease in expenses in connection with JOURNY.tv of $85,582 primarily
due to the previous contract with Dooya to get the channel in service; (b) a decrease in cloud database expenses of $9,270 primarily
related to updating legacy code to optimize compatibility with our hosting infrastructure; and (c) a decrease in software and website
expenses of $4,590 for hotel connections into the NextTrip database; partially offset by (a) an increase in dues and subscriptions of
$21,277 due to the implementation of our new CRM and business management platform together with incremental seat licenses for newly onboarded
employees; and (b) an increase in information technology expenses of $11,078 primarily due to onboarding additional employees, use of
outsourced IT services, and managing software subscriptions.
51
Organizational
costs for the three months ended May 31, 2026, were $50,104, as compared to $1,999,670 for the same period in 2025, a decrease of $1,949,566,
or 98%. The decrease is primarily attributed to stock options granted to former directors in the previous year.
Depreciation
and amortization expense for the three months ended May 31, 2026 was $336,669, as compared to $206,650 for the same period in 2025, an
increase of $130,019, or 63%. The increase was primarily due to commencing amortization upon the product launch of our FAST network,
JOURNY.tv, and the Journy TV, FSA, TA Pipeline, and GoUSA acquisitions in the previous year.
Provision
for credit loss expense for the three months ended May 31, 2026 was $65,561, as compared to $0 for the same period in 2025. The increase
was in connection with expenses for NextTrip Privilege, Inc. and the Regulation A offering, and reflects an increase in the credit loss
reserve due to the uncertainty of collectability of the receivable from NextTrip Privilege, Inc.
Other
operating expenses were $65,204 for the three months ended May 31, 2026, as compared to $45,170 for the same period in 2025. The $20,034
increase, or 44%, was primarily due to increased merchant processing fees related to group travel.
During
the three months ended May 31, 2026, we realized net other expense of $211,716, as compared to net other income of $193,812 in the same
period in 2025. The increase in net other expense of $405,528 was primarily due to $540,245 received from NextTrip Group, LLC in the
first quarter of fiscal year 2026 related to the NextPlay Technologies settlement, partially offset by a decrease in interest expense, a decrease in loss on extinguishment of liability, and a gain on the revaluation of the derivative liability in the first
quarter of fiscal year 2027.
Preferred
dividends for the three months ended May 31, 2026 were $19,691, as compared to $64,463, for the same period in 2025, a decrease of $44,772,
or 69%. The decrease was due to dividends paid to the holders of shares of Series L and Series M Preferred stock in the first quarter
of fiscal year 2026, which shares were converted to common shares in November 2025.
Three Months Ended May 31,
Operating loss by segment
2026
2025
% Change
Media
$ (626,015 )
$ (192,069 )
(226 )%
Travel
(214,946 )
(398,828 )
46 %
Total segment operating loss
(840,961 )
(590,897 )
(42 )%
Corporate
(2,072,792 )
(4,048,840 )
49 %
Total Operating loss
$ (2,913,753 )
$ (4,639,737 )
37 %
The
decrease of $1,725,984, or 37% in operating loss in the first quarter of fiscal year 2027 as compared to fiscal year 2026 was primarily
due to a decrease in corporate expenses of $1,901,048 as a result of stock based compensation issued to board members in the first quarter
of fiscal year 2026. The increase in the operating loss of the Media segment of $358,946 is due to the start-up of operations and is
primarily made up of contracted services in connection with our FAST channel. The decrease in operating loss for the Travel segment of
$183,882 is due to the increased revenues from the Five Star Alliance and TA Pipeline acquisitions.
The
decrease of $11,307 in the net loss on the share of net earnings from the equity method investment was due to losses incurred in FSA
from March 1, 2025 through April 9, 2025 when the full acquisition was finalized.
Our
net loss applicable to common stockholders for the three months ended May 31, 2026, was $3,145,160, as compared to $4,521,695 for the
same period in 2025, a decrease of $1,376,535, or 30%. The decrease was primarily attributable to a decrease in operating loss of $1,725,984,
a decrease in preferred dividends of $44,772, and decrease in the loss on the 49% share of net earnings for the equity method investee
of $11,307; partially offset by an increase in Other Expense of $405,528 due to a settlement agreement between NextTrip Group, LLC and
the Company related to the NextPlay Technologies, Inc. promissory note receivable that resulted in other income in the previous year.
52
Liquidity
and Capital Resources
Overview
We
have historically funded our operations through private placements of our securities, short-term promissory notes, and advances from
related parties. Given the limited revenue generated since inception, our principal sources of liquidity continue to be cash on hand
and external financing rather than cash generated from operations. Our principal short-term uses of cash are operating expenditures,
including personnel, technology development, sales and marketing, professional fees, and integration costs related to our recent acquisitions.
Principal longer-term uses of cash include scheduled debt service, payment of accrued interest, and additional investment in our travel
and technology platforms.
As
of May 31, 2026, we had cash of $803,490 and a working capital deficit of $1,599,429, as compared to cash of $1,696,090 and a working
capital deficit of $761,004 as of February 28, 2026. The increase in our working capital deficit was primarily attributable to growth
in accrued interest, accrued professional fees, and current maturities of short-term promissory notes, partially offset by the increase
in cash from financing activities. As of May 31, 2026, the aggregate outstanding balance on our short-term promissory notes, including
accrued interest, totaled $1,180,171, and the balance on our related-party line of credit totaled $3,029,589 including accrued interest.
Additionally, the Series B Convertible Preferred shares are redeemable on August 30, 2026, in the amount of $1,164,447 including accrued
interest, unless such redemption is extended to December 31, 2026 at the option of the investor.
Going
Concern — Substantial Doubt and Management’s Plans
Conditions
giving rise to substantial doubt. In accordance with Accounting Standards Codification (“ASC”) 205-40, Presentation
of Financial Statements — Going Concern, management evaluated whether there are conditions or events, considered in the aggregate,
that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these
financial statements are issued. As of May 31, 2026, we have incurred recurring net losses, have negative cash flows from operations,
have an accumulated deficit, have a working capital deficit, and have generated limited revenue since inception. For the three months
ended May 31, 2026, we incurred a net loss of $3,125,469 (before preferred dividends) and used $2,343,339 of cash in operating activities.
Based on our current operating plan, we estimate that we will require a minimum of $5.5 million of cash to fund existing operations for
the twelve months following the issuance date of these financial statements, which exceeds our cash balance of $803,490 as of May 31,
2026. These conditions and events, considered in the aggregate, raise substantial doubt about our ability to continue as a going concern
within one year after the date that these financial statements are issued.
Management’s
plans. To address the conditions described above, management’s plans include the following: (i) continuing to raise capital
through public and private placements of equity and equity-linked securities, including our offerings of common stock, Convertible Preferred
Stock, (and including other subsequent-event issuances that have generated aggregate gross proceeds of approximately $743,000 through
the date of this Quarterly Report); (ii) drawing on related-party financing arrangements as available (under which $950,000 of principal
was outstanding as of the date of this Quarterly Report, with respect to the short-term promissory note issued to The Donald P. Monaco
Insurance Trust on March 25, 2026, as amended) and seeking new debt financing on commercially reasonable terms; (iii) integrating recently
acquired businesses (TA Pipeline LLC, FSA, JOURNY.tv, and GoUSA) to accelerate revenue generation and expand our distribution channels;
(iv) managing discretionary operating expenditures, including selectively deferring non-essential technology and marketing spend; and
(v) pursuing strategic partnerships intended to monetize our travel and content assets. Management is in active discussions with prospective
investors and lenders, but no commitments have been received as of the issuance date of these financial statements.
Management’s
conclusion. Although management believes that its plans, if successfully executed, would provide sufficient liquidity to fund operations
for the next twelve months, these plans are not entirely within the Company’s control. The ability to consummate additional financings
on acceptable terms, generate sufficient revenue from acquired businesses, and otherwise execute on management’s plans cannot be
considered probable as of the issuance date of these financial statements. Accordingly, management has concluded that its plans do not
alleviate the substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern and do not include any adjustments to the recoverability
and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Company
be unable to continue as a going concern.
53
Sources
of Liquidity
Our
principal sources of liquidity during the three months ended May 31, 2026 consisted of: (i) net proceeds from private placements of common
stock, preferred stock, and warrants; and (ii) issuances of short-term promissory notes (including original-issue-discount notes). During
the quarter, we received aggregate gross proceeds of $1,315,100 from private placements of equity and equity-linked securities, $157,000
from the sale of short-term promissory notes, and $600,000 in the form of a promissory note from the Donald P. Monaco Insurance Trust,
a related party. We do not currently have any committed external sources of capital, other than the MIP Line of Credit, which is fully
drawn.
Amounts
noted reflect gross proceeds received by the Company which were reduced by original issue discounts, placement agent fees, and other
offering expenses, as applicable. The March 25, 2026 transaction with Donald Monaco and the April 15, 2026 transaction with KC Global
Media Asia, LLC are related-party transactions. Mr. Monaco is a director and Andy Kaplan, a director, is the co-trustee of the Kaplan-Wright
Family Trust, which owns 50% of KC Global Media Entertainment LLC, which in turn owns 100% of KC Global Media Asia, LLC; Mr. Kaplan also
serves as chairman of KC Global Media Asia, LLC. These transactions were entered into on substantially the same terms as the contemporaneous
transactions with unaffiliated investors.
March
24, 2026 — 1800 Diagonal Lending Note
On
March 24, 2026, we issued a short-term promissory note to 1800 Diagonal Lending LLC in the principal amount of $180,550. The note includes
an original issue discount of $23,550 and bears a one-time interest charge of 13%, which was applied to the principal on the issuance
date. The note is payable in five installments, with the first installment of $102,011 due on September 30, 2026 and four equal subsequent
installments of $25,503 due on the 30th day of each of the next four months. The note may be prepaid at any time without penalty.
Upon an event of default by the Company, any unpaid principal and interest may be converted into shares of our common stock at the election
of 1800 Diagonal Lending LLC.
March
25, 2026 — Donald P. Monaco Insurance Trust Short-Term Promissory Note (related party)
On
March 25, 2026, the Company issued an unsecured short-term promissory note (the “Monaco Trust Note” ) in the original
principal amount of $80,000 to The Donald P. Monaco Insurance Trust (the “Trust” ), the trustee of which is Donald
P. Monaco, the Chairman of our Board of Directors. The Monaco Trust Note bears interest at 7.5% simple interest per annum and was originally
scheduled to mature on April 3, 2026. The Monaco Trust Note may be prepaid at any time without penalty. The Monaco Trust Note was approved
by the Board, including the independent members thereof.
The
Monaco Trust Note has been amended to increase the principal amount and extend the maturity date, as follows: (i) on April 6, 2026, the
Company and the Trust entered into a First Amendment increasing the principal balance to $155,000 and extending the maturity date to
April 13, 2026; (ii) on April 9, 2026, the Company and the Trust entered into a Second Amendment increasing the principal balance to
$290,000 and extending the maturity date to April 30, 2026; (iii) on April 27, 2026, the Company and the Trust entered into a Third Amendment
increasing the principal balance to $400,000 and extending the maturity date to May 31, 2026; (iv) on April 30, 2026 the Company and
the Trust entered into a Fourth Amendment increasing the principal balance to $510,000; (v) on May 12, 2026, the Company repaid $110,000
of principal under the Monaco Trust Note; and on May 29, 2026 the Company and the Trust entered into a Fifth Amendment increasing the
principal balance to $600,000. Other terms of the Monaco Trust Note remained unchanged under each amendment. As of May 31, 2026, $600,000
of principal remained outstanding under the Monaco Trust Note. The 7.5% interest rate, which is lower than the 12% rate borne by the
MIP Line of Credit, reflects the short-term, on-demand nature of the Monaco Trust Note. The Monaco Trust Note, including each amendment,
was approved by the Audit Committee of the Board and the full Board, including the independent members thereof.
April
15, 2026 — Series A Convertible Preferred Stock Sale to KC Global Media Asia, LLC (related party)
On
April 15, 2026, we entered into a securities purchase agreement with KC Global Media Asia, LLC pursuant to which we issued and sold 16,667
shares of Series A Convertible Preferred Stock at a purchase price of $3.00 per share, for total proceeds of $50,000, together with a
warrant to purchase up to 8,333 shares of common stock at an exercise price of $3.00 per share, expiring 3.5 years from the issue date.
As described above, Andy Kaplan, a director of the Company, serves as chairman of KC Global Media Asia, LLC; accordingly, this transaction
is a related-party transaction. The transaction was approved by the Audit Committee of the Board and the full Board, including the independent
members thereof.
54
May
6, 2026 — Helena Global Series B Preferred Private Placement
On
May 6, 2026, we entered into a securities purchase agreement with Helena Global Investment Opportunities 1 Ltd ( “Helena” )
pursuant to which we issued and sold 368,421 shares of newly designated Series B Convertible Preferred Stock (the “Series B
Preferred” ) at a purchase price of $2.755 per share, together with an additional 40,000 shares of Series B Preferred issued
as an issuance fee, for total proceeds of $1,015,000. In addition, we issued to Helena a five-year warrant to purchase up to 100,000
shares of common stock at an exercise price of $2.755 per share and may be exercised on a cashless basis if there is no effective registration
statement in place and if there is an Event of Default pursuant to the terms of the Certificate of Designation and is continuing.
The
Series B Preferred (i) ranks pari passu with our other series of preferred stock and senior to our common stock with respect to dividends
and distributions on liquidation; (ii) carries a cumulative cash dividend of 12% per annum, increasing to 18% per annum upon an event
of default; (iii) is convertible into shares of common stock at a conversion price of $2.755 per share, subject to customary beneficial
ownership limitations; and (iv) is subject to mandatory redemption at the stated value plus accrued and unpaid dividends on August 30,
2026, unless the holder elects in writing to extend the redemption date to December 31, 2026.
In
addition, Helena was granted (i) a right of participation of up to 20% of any future securities offering by the Company (other than exempt
issuances); (ii) an exchange right pursuant to which Helena may exchange Series B Preferred for offered securities at 100% of stated
value; and (iii) registration rights pursuant to which the Company is required to file a registration statement with the SEC covering
the resale of the shares of common stock issuable upon conversion of the Series B Preferred and exercise of the related warrant within
15 days after closing, and to use best efforts to cause such registration statement to become effective within 30 days (or 60 days if
the SEC reviews) after closing. The Company has also agreed that, during the 180-day period following closing, Helena may require the
Company to apply 25% of the net proceeds of any “at the market” offering to redeem outstanding shares of Series B Preferred
at the contractual redemption price. Additional terms of the Series B Preferred are set forth in the Certificate of Designation filed
with the Nevada Secretary of State and described in our Current Report on Form 8-K filed with the SEC on May 8, 2026.
The
Company’s obligations under the Series B Preferred are secured by a pledge of 1,365,314 shares of common stock owned by William
Kerby, our Chief Executive Officer. Net proceeds are being used for general working capital purposes. Helena is not a related party.
The $2.755 per share purchase price represented the Nasdaq Minimum Price plus $0.125 as of the date of the related securities purchase
agreement.
May
6, 2026 — Common Stock Sale to a Private Investor
On
May 6, 2026, we entered into a securities purchase agreement with a private investor pursuant to which we issued and sold 36,400 shares
of common stock at a purchase price of $2.75 per share, together with a three-year warrant to purchase up to 18,200 shares of common
stock at an exercise price of $2.75 per share, for total proceeds of $100,100. The investor is not a related party.
May
8, 2026 — Common Stock Sale to KC Global Media Asia, LLC (related party)
On
May 8, 2026, we entered into a securities purchase agreement with KC Global Media Asia, LLC pursuant to which we issued and sold 18,182
shares of common stock at a purchase price of $2.75 per share, for total proceeds of $50,000, together with a warrant to purchase up
to 9,091 shares of common stock at an exercise price of $3.00 per share, expiring on May 8, 2029. As described above, Andy Kaplan, a
director of the Company, serves as chairman of KC Global Media Asia, LLC; accordingly, this transaction is a related-party transaction.
The transaction was approved by the Audit Committee of the Board and the full Board, including the independent members thereof.
May
26, 2026 — 1800 Diagonal Lending Note
On
May 26, 2026, we issued a short-term promissory note to 1800 Diagonal Lending LLC in the principal amount of $172,500. The note includes
an original issue discount of $22,500 and bears a one-time interest charge of 13%, which was applied to the principal on the issuance
date. The note is payable in five installments, with the first installment of $97,462 due on November 30, 2026 and four equal subsequent
installments of $24,366 due on the 30th day of each of the next four months. The note may be prepaid at any time without penalty.
Upon an event of default by the Company, any unpaid principal and interest may be converted into shares of our common stock at the election
of 1800 Diagonal Lending LLC.
55
Chief
Executive Officer Compensation Deferral (related party)
William
Kerby, our Chief Executive Officer, has agreed at his election to defer $100,000 of his annual salary, together with payments related
to personal financial guarantees and his car allowance. As of May 31, 2026, the aggregate compensation deferred by Mr. Kerby totaled
$308,334. The deferred amounts accrue interest at a rate of 7.5% per annum. The Company’s ability to retain these deferred amounts
as a source of working capital is contingent on Mr. Kerby’s continued election to defer payment.
Material
Cash Requirements
Our
material cash requirements as of May 31, 2026 consist principally of short-term promissory notes, accrued interest, and the outstanding
balance on the MIP Line of Credit. Short-term promissory notes outstanding at May 31, 2026 had an aggregate repayment amount due of approximately
$1,180,171 and a carrying value, net of unamortized discount, of $946,817, with maturities through March 31, 2027, including the September
26, 2025, October 24, 2025, March 24, 2026 and May 26, 2026 1800 Diagonal Lending notes (which amortize in installments), the Donald
P. Monaco Insurance Trust note, as amended, which matures on July 15, 2026 and the October 17, 2025 notes issued to two private investors
(maturing November 17, 2026, as amended). The MIP Line of Credit has an outstanding principal balance of $3,000,000, with all principal
and accrued interest due at the May 31, 2028 maturity date, as amended. Interest accrues at 12% per annum and is payable monthly. Additionally,
the Series B Convertible Preferred shares are redeemable on August 30, 2026, in the amount of $1,164,447 unless such redemption is extended
to December 31, 2026 at the option of the investor.
We
have ongoing operating cash requirements for personnel, technology development, marketing, professional fees, and acquisition integration.
Based on our current operating plan, we estimate that cash required to fund operations for the twelve months following May 31, 2026 will
be approximately $5.5 million, which exceeds our cash balance at May 31, 2026. We do not have any material commitments for capital expenditures,
and we do not have any material purchase obligations, take-or-pay contracts, or unconditional purchase obligations outside the ordinary
course of business. We have no off-balance sheet arrangements (within the meaning of Item 303(b)(1)(ii) of Regulation S-K) that have,
or are reasonably likely to have, a material current or future effect on our financial condition, results of operations, liquidity, capital
expenditures, or capital resources.
Cash Flow Analysis
Three Months ended May 31,
2026
2025
Change ($)
Change (%)
Net cash used in operating activities
(2,343,339 )
(1,042,658 )
(1,300,681 )
(125 )%
Net cash used in investing activities
(237,561 )
(1,281,503 )
1,043,942
81 %
Net cash provided by financing activities
1,688,300
1,392,700
295,600
21 %
Net increase (decrease) in cash
(892,600 )
(931,461 )
38,861
4 %
Net
Cash Used in Operating Activities
Net
cash used in operating activities totaled $2,343,339 during the three months ended May 31, 2026, compared to $1,042,658 during the
same period in 2025, an increase of $1,300,681, or 125%. The operating cash outflow during the current period was driven by a net
loss of $3,125,469 (before payment of preferred dividends), partially offset by non-cash charges of $949,494 and further increased
by net changes in working capital of $167,364. Non-cash charges included depreciation and amortization of $336,669, amortization of
debt discount of $113,533, and shares issued for professional services of $552,952, partially offset by a reversal of employee
stock-based compensation of $13,660 and a gain on the derivative liability revaluation of $40,000. Changes in working capital primarily reflected a decrease in deferred revenue of $807,464 and
an increase in accounts receivable of $133,207, partially offset by an increase in accounts payable and accrued expenses of $439,724
and a decrease in prepaid expenses of $344,626.
Net
Cash Used in Investing Activities
Net
cash used in investing activities was $237,561 during the three months ended May 31, 2026, compared to $1,281,503 during the same period
in 2025, a decrease of $1,043,942, or 81%. Investing outflows in the current period consisted entirely of capitalized software development
costs of $237,561. In the prior-year period, investing activities consisted of $81,503 in capitalized software development costs, $900,000
paid for the FSA Travel LLC acquisition, and $300,000 for the JOURNY.tv asset purchase.
56
Net
Cash Provided by Financing Activities
Net
cash provided by financing activities was $1,688,300 during the three months ended May 31, 2026, compared to $1,392,700 during the same
period in 2025, an increase of $295,600, or 21%. Financing activities in the current period consisted of $1,015,000 of gross proceeds
from our Series B Convertible Preferred Stock offering ($895,000 net of $120,000 in related offering costs), $150,100 of proceeds from
sales of common stock, $150,000 of proceeds from sales of preferred stock ($145,000 net of $5,000 in offering costs), $157,000 of proceeds
from a bridge loan (offset by $258,800 of bridge loan repayments), and $600,000 of advances from a related party. In the prior-year period,
financing activities consisted of $1,200,000 of advances from a related party and $192,700 of proceeds from notes payable.
Known
Trends, Demands, Commitments, and Uncertainties
Need
for additional financing. We will need to raise additional capital through equity, equity-linked, or debt financings, or through
other arrangements, to support continuing operations and to execute our business plan. Our existing cash balance is not sufficient to
fund our anticipated operating cash requirements for the next twelve months. There can be no assurance regarding the availability or
terms of any additional financing. If we issue additional equity or equity-linked securities, our stockholders may experience material
dilution, and any new securities may have rights, preferences, or privileges senior to those of our existing common stock. If we incur
additional debt, the related instruments may impose covenants and repayment obligations that adversely affect our financial flexibility
or business operations. If we are unable to obtain financing when needed, we may be required to delay, scale back, or eliminate one or
more aspects of our business plan, including planned product and content investments, and we may lose our Nasdaq listing.
Nasdaq
listing requirements. Our continued listing on the Nasdaq Capital Market requires compliance with applicable minimum bid price, stockholders’
equity, market value, and other continued-listing standards. Adverse developments in our operations or financial condition, or further
dilutive issuances, could affect our ability to maintain compliance with these requirements. Failure to maintain compliance could result
in delisting, which would adversely affect the liquidity of our common stock and our ability to raise additional capital.
Macroeconomic
and geopolitical conditions. We are unable to predict the effect that broader macroeconomic conditions — including elevated
interest rates, inflationary pressure on input and labor costs, fluctuations in consumer travel demand, foreign currency volatility,
and geopolitical events such as the ongoing conflicts in Ukraine, Iran and Israel — may have on our access to the capital markets,
our cost of capital, the timing and cost of our acquisitions, or consumer demand for our travel products. Continued unfavorable trends
in these areas could increase our use of cash and impair our ability to obtain additional financing on acceptable terms.
Acquisition
integration. We expect to continue to incur integration costs in fiscal 2027 as we combine acquired operations, technology, and content.
These integration activities are intended to accelerate revenue generation, but the timing and magnitude of any related revenue contribution
remain uncertain.
Subsequent
Events Affecting Liquidity
On
June 9, 2026, we sold a short-term promissory note to a private investor for $100,000. In connection with the note, we issued the investor
a three-year warrant to purchase up to 25,000 shares of common stock at an exercise price of $2.75 per share. The maturity date of the
note is August 8, 2026, and may be prepaid at any time without penalty.
On
June 16, 2026, a private investor exercised a warrant to purchase 8,278 shares of common stock at $3.02 per share, resulting in gross
proceeds of $25,000.
On
June 18, 2026, David Jiang, a director, purchased 18,200 shares of common stock in a private placement at $2.75 per share resulting in
gross proceeds of $50,050.
57
The
Donald P. Monaco Insurance Trust (the “Trust”) promissory note has been amended to increase the principal amount and extend
the maturity date, as follows: On June 3, 2026 the Company and the Trust (the “Parties”) entered into the Sixth Amendment
extending the maturity date to June 30, 2026; on June 8, 2026 the Parties entered into the Seventh Amendment increasing the principal
balance to $700,000, and on June 30, 2026 the Parties entered into the Eighth Amendment increasing the principal balance to $950,000
and extending the maturity date to July 15, 2026. Other terms of the Monaco Trust Note remained unchanged under each amendment. As of
the date of this Quarterly Report, $950,000 of principal remained outstanding under the Monaco Trust Note. The 7.5% interest rate, which
is lower than the 12% rate borne by the MIP Line of Credit, reflects the short-term, on-demand nature of the Monaco Trust Note. The Monaco
Trust Note, including each amendment, was approved by the Audit Committee of the Board and the full Board, including the independent
members thereof.
On
July 1, 2026, the Company entered into a short-term loan agreement with OnDeck for a principal amount of $275,000. The loan is repayable
in eighteen monthly installments of $20,533 for a total repayment amount of $369,600. The origination fee was $6,875 and the total interest
expense is $94,600 for a total loan cost of $101,475.
Trend
in pricing. Our equity issuances during the three months ended May 31, 2026 were priced $2.75 per share. The subsequent-event common
stock issuances were priced at $2.55 and $3.02 per share, respectively, representing a decline relative to fiscal year 2026 issuance
prices. This pricing trend, if it continues, may increase the dilutive impact of future financings on our existing stockholders and may
indicate continued pressure on our access to capital on favorable terms.
Other
than the foregoing, no material subsequent events related to our liquidity and capital resources have occurred from May 31, 2026 through
the date of this Quarterly Report.
Critical
Accounting Estimates
Our
discussion of critical accounting estimates that affect liquidity, capital resources, and results of operations is set forth in “Critical
Accounting Estimates” elsewhere in Management’s Discussion and Analysis of Financial Condition and Results of Operations
and in Note 2, “Summary of Significant Accounting Policies,” to the financial statements included elsewhere in this
Quarterly Report.
Other
Information
Other
than the MIP Line of Credit and the related-party promissory notes described in Note 12, “Related Party Transactions,”
to the financial statements included elsewhere in this Quarterly Report, we have no lines of credit or other financing arrangements.
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.