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, 2025 (this “Quarterly Report”) contains “Forward-Looking Statements.” All
statements other than statements of historical fact are “Forward-Looking Statements” including but not limited to,
statements regarding our expectations about development and commercialization of our technology, any projections of revenues or
statements regarding our anticipated revenues or other financial items, any statements of the plans and objectives of management for
future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions
or performance, and any statements of assumptions underlying any of the foregoing. All Forward-Looking Statements included in this
Quarterly Report are made as of the date hereof and are based on information available to us as of such date. We assume no
obligation to update any Forward-Looking Statement. In some cases, Forward-Looking Statements can be identified by the use of
terminology such as “may,” “will,” “expects,” “plans,” “anticipates,”
“intends,” “believes,” “estimates,” “potential,” or “continue,” or the
negative thereof or other comparable terminology. Although we believe that the expectations reflected in the Forward-Looking
Statements contained herein are reasonable, there can be no assurance that such expectations or any of the Forward-Looking
Statements will prove to be correct, and actual results could differ materially from those projected or assumed in the
Forward-Looking Statements. Future financial condition and results of operations, as well as any Forward-Looking Statements are
subject to inherent risks and uncertainties, including factors referred to in our press releases and reports filed with the
Securities and Exchange Commission (the “SEC”). All subsequent Forward-Looking Statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Additional factors that may
have a direct bearing on our operating results are described under the caption “Risk Factors” in our Annual Report on
Form 10-K for the year ended February 28, 2025 and elsewhere in this Quarterly Report.
Corporation Information
Sigma Additive Solutions, Inc. (“Sigma”),
the legal acquiror of NextTrip, was initially incorporated as Messidor Limited in Nevada on December 23, 1985, and changed its name to
Framewaves Inc. in 2001. On September 27, 2010, the name was changed to Sigma Labs, Inc. On May 17, 2022, Sigma Labs, Inc. began doing
business as Sigma Additive Solutions, and on August 9, 2022, changed its name to Sigma Additive Solutions, Inc.
On March 11, 2024, Sigma filed a Certificate of
Amendment to its Amended and Restated Articles of Incorporation, as amended to date, with the Secretary of State of the State of Nevada,
pursuant to which, effective as of 12:01 a.m. Pacific time on March 13, 2024, among other things, Sigma’s corporate name was changed
from Sigma Additive Solutions, Inc. to “NextTrip, Inc.”
Our principal executive offices are located at
3900 Paseo del Sol, Santa Fe, New Mexico 87507, and our telephone number is (954) 526-9688. Our website address is www.nexttrip.com .
The Company’s annual reports, quarterly reports, current reports on Form 8-K and amendments to such reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other information related
to the Company, are available, free of charge, on our website. The Company’s website and the information contained therein, or connected
thereto, are not and are not intended to be incorporated into this Quarterly Report.
The Company provides travel technology solutions
with sales originating in the United States, with a primary emphasis on hotels, air, and all-inclusive travel packages. Our proprietary
booking engine, branded as NextTrip 2.0, provides travel distributors access to a sizeable inventory.
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The Company owns 50% of Next Innovation LLC, a Joint
Venture (“Next Innovation”), which is dormant. No activities nor operations occurred through Next Innovation in fiscal years
2024 or 2025 for this entity, and the Company does not have control of Next Innovation and therefore no minority interest was recorded.
Reverse Acquisition
On October 12, 2023, the Company (then known as Sigma)
entered into a Share Exchange Agreement (the “Exchange Agreement”) with NextTrip Holdings, Inc. (“NTH”),
NextTrip Group, LLC (“NTG”), and William Kerby (the “NTH Representative”), pursuant to which the Company acquired
NTH (the “NextTrip Acquisition”) in exchange for shares of our common stock, which we refer to as the Exchange Shares. The
NextTrip Acquisition was consummated on December 29, 2023. As a result, NTH became a wholly owned subsidiary of the Company.
Upon the closing of the NextTrip Acquisition,
the shareholders of NTG (collectively, the “NTG Sellers”), were issued a number of Exchange Shares equal to 19.99%, or 156,007
shares, of our issued and outstanding shares of common stock immediately prior to the closing. Under the Exchange Agreement, the
NTG Sellers were entitled to receive additional shares of our common stock, referred to as the Contingent Shares, subject to NTH’s
achievement of future business milestones (the “Milestone Events”) specified in the Exchange Agreement as follows:
Milestone Event
Date Earned
Contingent Shares
Status as of the date of this Prospectus
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.
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Alternatively, independent of the aforementioned
milestones, for each month during the fifteen month period following the closing date in which $1,000,000 or more in gross travel bookings
were generated by the combined company, to the extent not previously issued, the Contingent Shares would be issuable up to the maximum
Contingent Shares issuable under the Exchange Agreement.
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 ap proval
of the initial listing application prior to the issuance of the Contingent Shares; failure to obtain such approval in advance of the
Contingent Share issuance would have resulted in Nasdaq issuing the Company a delisting determination and commencing delisting proceedings
with respect to its common stock.
Pursuant to Section 2.3(b)(vi) of the Exchange
Agreement, whether a Milestone Event is met and the Contingent Shares are issuable under Section 2.3 is to be determined by the Company
and NTH on a mutually agreeable date (each a “Milestone Payment Determination Date”) no later than thirty (30) days following
notice by NTH to the Company that such Milestone Event has been met. If Contingent Shares are determined to be issuable under this Section,
the Company is required to issue such additional Contingent Shares within 60 days following each Milestone Payment Determination Date.
As of December 9, 2024, no Contingent Shares had
been issued despite neither party disputing that, at such time, three of the four milestones had been met. This was a result of delays with the
Company’s Form S-1 registration statement and the Company’s pending initial listing application with Nasdaq (the “Regulatory
Delays”) pursuant to Nasdaq Listing Rule 5110(a). NTH had not sent formal notice to the Company at such time but expressed an intent
to do so in the near future.
As a result, on December 9, 2024, the
Company and NTH entered into that certain Forbearance Agreement, whereby NTH agreed to forbear from issuing the Milestone Payment
Determination Date notice until January 31, 2025 or earlier in the event of a default (the “Forbearance Expiration
Date”) in exchange for an agreement by the Company that, if such Nasdaq initial listing application is not approved by such
date that, (i) all earned Contingent Shares will be issued withing five (5) business days of the Forbearance Expiration Date and
(ii) all such Board Appointment Rights will be exercised and the director designees will be approved within five (5) business days
of the Forbearance Expiration Date. On January 31, 2025, the Nasdaq initial listing application was not yet approved and the parties
entered into Amendment No. 1 to Forbearance Agreement to extend the Forbearance Expiration Date to March 31, 2025.
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 issue d 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 will resign as directors of the Company. Stephen Kircher shall serve as a Class I director, with his initial term
expiring at the Company’s 2028 Annual Meeting of Stockholders; Jimmy Byrd shall serve as a Class II director, with his initial term
expiring at the Company’s 2026 Annual Meeting of Stockholders; and Ms. Diges and Mr. Jiang shall each serve as a Class III director,
with their initial terms expiring at the Company’s 2027 Annual Meeting of Stockholders. Each of NTH Appointees will serve as a director
for the balance of their respective initial terms, and until his or her successor is elected and qualified, subject to his or her earlier
death, resignation or removal.
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Critical Accounting Policies and Estimates
The preparation of financial statements in conformity
with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions
that affect the reported assets, liabilities, sales and expenses in the accompanying financial statements. Critical accounting policies
are those that require the most subjective and complex judgments, often employing the use of estimates about the effect of matters that
are inherently uncertain. By their nature, changes in these assumptions and estimates could significantly affect our financial position
or results of operations. Significant accounting estimates that may materially change in the near future are revenue recognition, impairment
of long-lived assets, values of stock compensation awards and stock equivalents granted as offering costs, and allowance for bad debts
and inventory obsolescence. Such critical accounting policies, including the assumptions and judgments underlying them, are disclosed
in Note 1 of the Notes to Financial Statements included in this Quarterly Report. However, we do not believe that there are any alternative
methods of accounting for our operations that would have a material effect on our financial statements.
The critical accounting policies and estimates
addressed below reflect our most significant judgements and estimates used in the preparation of our financial statements.
Revenue Recognition – The Company
recognizes revenue in accordance with ASC 606 which involves identifying the contracts with customers, identifying performance obligations
in the contracts, determining transactions price, allocating transaction price to the performance obligation and recognizing revenue when
the performance obligation is satisfied.
The Company recognizes revenue when the customer
has purchased the product, the occurrence of the earlier of date of travel or the date of cancellation has expired, as satisfaction of
the performance obligation, the sales price is fixed or determinable and collectability is reasonably assured. Revenue for customer travel
packages purchased directly from the Company are recorded gross (the amount paid to the Company by the customer is shown as revenue and
the cost of providing the respective travel package is recorded to cost of revenues).
The Company generates revenues from sales directly
to customers as well as through other distribution channels of tours and activities at destinations throughout the world.
The Company controls the specified travel product
before it is transferred to the customer and is therefore a principal, based on but not limited to, the following:
●
The Company is primarily responsible for fulling the promise to provide such travel product.
●
The Company has inventory risk before the specified travel product has been transferred to a customer or after transfer of control to a customer.
●
The Company has discretion in establishing the price for the specified travel product.
Payments for tours or activities received in advance
of services being rendered are recorded as deferred revenue and recognized as revenue at the earlier of the date of travel or the last
date of cancellation (i.e., the customer’s refund privileges lapse).
Investments in Equity Securities without Readily
Determinable Fair Value
In accordance with ASC 321-10-35-2, the Company
holds certain investments in equity securities in which the Company does not have significant influence or control, and for which fair
value is not readily determinable. These investments are primarily accounted for at cost, less any impairment. The carrying amount is
periodically evaluated for impairment, and if necessary, an impairment loss is recognized in the statement of operations. These investments
are not adjusted for unrealized gains or losses unless an impairment is identified.
For investments in non-public entities where fair
value is not determinable, the Company does not adjust the carrying value for changes in fair value, except for impairment losses. The
fair value of these investments is disclosed when it is practicable to determine.
Promissory Note Receivable
Pursuant to the terms of the Promissory Note
(the “NextPlay Note”) between NTH and NextPlay Technologies, Inc. (“NextPlay”), the NextPlay Note was due and payable in full on the earlier of
September 1, 2023 or the date the Company completed a financing of $10 million or more. No payments have been made by NextPlay, and
as such NextPlay is in default under the terms of the NextPlay Note.
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On January 27, 2025, as creditors of NextPlay,
Donald P. Monaco, the Company’s Chairman, William Kerby, the Company’s Chief Executive Officer, and Ian Sharpe, the Chief
Operating Officer of the Company’s Media division, filed a petition to force NextPlay into involuntary bankruptcy as a result of
unpaid fees. The proceedings are ongoing and the outcome at this time is uncertain and cannot be predicted. As a result, management has
determined that the collectability of the NextPlay Note is uncertain and has therefore established an allowance for doubtful accounts
for the entire balance of $2,567,665.
Business Overview
NextTrip is an early-stage,
technology-driven travel company developing an integrated travel booking and media platform designed to connect leisure, group and
business travelers to the world. Our travel booking platform is powered by our proprietary NXT2.0 booking engine, which offers
extensive inventory, supporting both travelers and distributors with a platform for curating personalized experiences and efficient
trip planning and booking. We market our travel services through several core brands including NextTrip Vacations
(direct-to-consumer leisure travel), Five Star Alliance (luxury and cruise bookings) and NextTrip Business (small-to-mid-sized
corporate travel) and differentiate our platform through specialty features, including specialized widgets for groups (the
“Groups Platform”) and travel agents (the “Travel Agent Platform”), as well as PayDlay, a delayed payment
booking option. Complementing our booking engine are our media properties, including Journy.tv, Compass.tv and Travel Magazine,
which provide destination content that we believe will drive high-intention traffic into our booking funnel and, over time,
constitute a separate high-margin advertising revenue stream.
By integrating our media properties with our travel
booking platform, our ambition is to build a next-generation travel solution for consumers, allowing them to better research and explore
desired travel destinations. To accomplish this, we will be using content from ours and others’ media platforms featuring travel
videos, blogs and articles along with access to curated travel products from our strategic partnerships, all supported by our technology
and call center agents. Upon full integration of our travel and media platforms, we believe our offers will both inspire and empower consumers
to make informed choices when booking. This contrasts with the existing online travel agency (“OTA”) model that focuses on
volume bookings with little to no service support.
NXT2.0 – Our Integrated Travel Booking
Platform
At the core of our business is our proprietary,
direct-to-consumer NXT2.0 travel booking engine, which has been continually enhanced and developed through a series of acquisitions of
a variety of media and travel assets. NXT2.0 powers several websites, including our main leisure site, nexttrip.com, and fivestaralliance.com,
our widgets for The Groups and Travel Agent Platforms, as well as providing travel booking solutions for our media hubs, Journy.tv, travelmagazine.com
and Compass.tv. We serve both leisure and business travelers by offering them access to travel blogs, videos and concierge assistance
to aid in planning travel, coupled with our proprietary booking platform for the direct purchase of flights, hotels, vacation homes, cruise,
tours, and other travel products. Our content includes destination guides, maps and travel tips, designed to help travelers plan memorable
trips and book those trips on our travel platform.
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Travel Products and Services
As with many OTAs or booking engines in the
travel industry, a travel booking platform is the technological foundation of our business. Our travel-product strategy relies on
the NXT2.0 booking engine, whose commercial viability depends on a mix of higher-margin direct contracts and lower-margin,
third-party application program interface (“API”) inventory which broadens the platform’s reach. Our principal objective is to negotiate fixed-base-pricing agreements that confer pricing control and margin
optimization; these contracts permit us to deploy competitively priced promotions while preserving profitability. Early
initiatives have concentrated on hotel and vacation suppliers, including the April 3, 2025 agreement under which NextTrip became the
exclusive booking engine for Intimate Hotels of Barbados, a consortium of more than 35 independent properties.
This flexibility affords us the opportunity to
run specials on travel offerings that are highly competitive, but we will require additional funding to support comprehensive marketing
and awareness campaigns to attract new customers. Until this happens, we are working to target customers with low dollar marketing campaigns
in the leisure travel space, as well as pursuing strategic partnerships and specialized travel offerings (e.g. Groups Platform), while
maintaining competitiveness within our marketplace through adjustment of pricing.
To supplement and scale our proprietary
content, we have layered in third-party inventory through API integrations, thereby furnishing users with comprehensive, one-stop
access to more than four million hotels, vacation rentals, cruises, and activity products worldwide. This phase commenced with the
acquisition of BookIt.com and associated access to Expedia’s global hotel database and has since expanded to encompass
strategic alliances with Nuitée, Global Distribution Systems, Signature Vacations, and other third-party suppliers. The
Company has also strengthened its luxury and cruise offerings through the acquisition of Five Star Alliance, whose curated portfolio
of over 5,000 five-star properties and 400,000 monthly site visitors, resulting in an industry coveted 4.9-star Trustpilot rating,
helps enhance NextTrip’s technology-driven platform. Collectively, these integrations are intended to provide the inventory
depth necessary to activate NextTrip’s specialty features, facilitate cross-selling, and establish a scalable foundation for
future direct-contract growth. See “ Recent Developments – Acquisition of Five Star Alliance ” for more
details on the transaction.
Our offerings include a mixture of
direct contracts and third-party API content which span leisure and business travel, alternative lodging, wellness travel, and media solutions,
engaging customers throughout their travel journey with both individual and packaged options. Such product offering highlights include:
●
NextTrip Leisure – A robust booking engine providing customized vacation packages, flights, hotels, tours, wellness vacations, cruise and group travel options.
●
NextTrip Luxury & Business – Five Star Alliance provides access to over 5,000 luxury hotel properties worldwide featuring booking, expense reporting, concierge services, and 24/7 support.
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●
NextTrip Cruises – a fully integrated cruise booking engine providing access to over 10,000 sailings and 35 cruise partners. Travelers benefit from exclusive pricing, concierge service, and bundled packages that include transfers, pre- and post-cruise stays, and expert travel support.
●
NextTrip Solutions – A suite for product management and white-label solutions, including property management, vacation rentals, and a portal to support travel agents – the Travel Agent Platform.
●
NextTrip Media – Travel Magazine, Journy.tv and Compass.tv offering travelers inspiration and information through articles, videos, and immersive digital experiences. This will include personalized travel content for users to explore and share with friends and family.
NXT2.0 Platform Features
Our NXT2.0 travel booking platform at nexttrip.com
offers tools for browsing and comparing flights, hotels, tours, cruises and activities. Additionally, we allow travelers to defer payments
on select vacation packages with our proprietary PayDlay program. PayDlay allows travelers to purchase travel with a small deposit and
make subsequent payments between purchase and the week before travel. Registered NextTrip travelers can manage bookings, receive updates
on special offers, and subscribe to newsletters with travel tips and destination highlights. Security is a priority, with rigorous content
screening and Payment Card Industry compliance to safeguard customer information. The platform further distinguishes itself through exclusive
supplier partnerships that yield preferential rates, targeted promotions, and inventory advantages, while its robust architecture supports
complex group bookings—covering conferences, conventions, and destination weddings via a specialized Groups Platform—and equips
over 150 beta-testing professionals with a Travel Agent Platform that streamlines multi-passenger reservations.
As we execute our business model by increasing our inventory base and expanding
key partnerships, we plan to launch a series of additional features designed to benefit its users. We intend to further integrate our
media features with our booking system, bringing together travel content and itinerary management in one interface. The “My Journy”
personalized travel-planning magazine is intended to provide editorial features, destination information, and user-specific offers based
on analysis of past searches and bookings. By including this content in the booking process, NXT2.0 aims to turn browsing into bookings
more efficiently and give suppliers better opportunities to promote their products. We also plan to introduce a multi-level Rewards program
that gives benefits for repeat bookings, using different channels, and social interactions within the platform. A planned group chat and
sharing feature will let families, friends, and corporate groups work together on itinerary changes in real time. These developmental
features are designed to encourage customer loyalty and keep users engaged with NXT2.0. An AI-powered travel assistant is in development
which is intended to provide recommendations, price alerts and support, offering services usually found in premium travel agencies in
a digital format. Following the initial launch of the Travel Agent Platform, we are continuing development of new tools for travel agents.
With new product options like cruises, wellness retreats, and extra experiences, NXT2.0 aims to attract more leisure and business travelers.
These updates are intended to boost user engagement, speed up bookings, and increase customer value, while giving NextTrip a competitive
edge through technology and personalized data.
NextTrip Integrated Media Solutions
In addition to the key features, robust inventory,
and focus on underserved market opportunities like groups and travel agent bookings, a key differentiator benefiting the growth and development
of our NXT2.0 booking engine is our media strategy which, when fully integrated with NXT2.0, is intended to offer a comprehensive travel
and media ecosystem designed to guide and support consumers throughout their travel experience from inspiration to booking, to travel
to sharing the journey on social media.
We leverage our media brands—TravelMagazine.com,
Compass.tv, and Journy.tv—as strategic tools to generate travel bookings by integrating content, marketing, and booking technology
as well as to generate advertising revenues for third-party content. The strategy includes generating content marketing and inspiration,
integrating booking opportunities into that content and generating feedback from such advertising data to better target and identify travel
interests and intent, which is intended to lead to growing brand trust and authority and future partnerships and opportunities for sponsored
advertising content.
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By combining engaging travel content with seamless
booking technology and targeted marketing, our media brands serve as both inspiration engines and direct booking channels.
This holistic approach helps capture travelers at every stage of the decision-making process, ultimately driving more bookings through
the NXT2.0 platform and independent advertising revenue.
Key media brands and partnership include:
●
Travel Magazine – TravelMagazine.com is our media hub. It is an online travel publication that provides articles, guides, tips, and inspiration for travelers. Coming soon is “My Bucket List,” a platform where travelers can create and share personalized travel lists, supported by booking features and local insights.
●
Compass.tv and Journy.tv – Compass.tv was launched in Fall 2024, as an AVOD (Advertising-based Video on Demand) platform designed to provide streaming television content, often focusing on live and on-demand programming. Compass.tv offers over 1,200 hours of travel content including key travel influencers with millions of followers. In April 2025, we acquired Journy.tv, a Free Ad-Supported Streaming TV (“FAST”) Channel that specializes in travel, adventure, and culture-focused content.
●
Promethean – Promethean is our proprietary interactive video overlay platform which is intended to drive ad revenue and facilitate content-to-commerce integration.
●
Leap Media – In December 2024, we announced our collaboration with Leap Media Group, a respected leader with over 35 years in TV advertising, media planning and buying, to support the launch of advertising on Compass.tv by delivering branded entertainment content and advertising seamlessly across its platform.
●
Blue Fysh – In February 2025, the Company and Blue Fysh Holdings Inc. (“Blue Fysh”) entered into a share exchange agreement creating minority ownership positions between the entities, as part of their mutual efforts to work together to expand each company’s business opportunities. See “ Recent Developments – Blue Fysh Share Exchange ” for more details on the transaction.
The strategic partnership between NextTrip and
Blue Fysh is intended to focus on:
●
Expanded audience reach integrating NextTrip’s FAST Channel (Compass.tv), media platform (TravelMagazine.com), and travel products platform (NextTrip.com) with Blue Fysh’s expertise in digital OOH solutions throughout North America;
●
Increased advertising revenue by leveraging their combined media assets, to enhance their ability to broaden reach, deployment, and higher expected advertising fees, providing greater value to advertisers and stakeholders;
●
Enhanced sales efforts with NextTrip utilizing Blue Fysh’s strategic sales relationships to contribute advertising sales across NextTrip’s media platforms; and
●
Increased Brand Awareness as a result of Blue Fysh’s media relationships and digital displays to help create flash marketing campaigns to raise awareness of NextTrip and highlight NextTrip’s travel products and services as well as its media properties, Compass.tv, Journy.tv and Travel Magazine.
Revenue Strategy and Development of an Integrated
Travel and Media Ecosystem
Our revenue strategy and business model focuses on integrating our Media
and Travel divisions, offering users a comprehensive ecosystem designed to guide and support them throughout the travel experience. Presently,
we generate revenue through two core methods: travel bookings and advertising revenue.
Travel Bookings and Related Service s
NextTrip, like many OTAs and travel platforms,
can generate revenue through a variety of channels. The specific mix depends on the continued development of our platform, execution of
our business model, partnerships, and the types of services we offer at any given time.
Product sales are generally structured either: (1) as a set commission
on the sale of a travel product whereby the supplier or wholesaler controls the pricing (as is the case with the majority of Five Star
Alliance products), or (2) through a direct, negotiated contract between product supplier and the Company (as is the case with the majority
of our products) which allows us to set our own retail pricing based upon market forces and a need to maintain a markup above its fixed
cost. Commission-based travel products are generally lower margin than directly negotiated travel products.
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The flexibility of directly negotiated contracts
affords us the opportunity to both run specials that are highly competitive but result in low margins, or to simply adjust pricing
to maintain competitiveness within its market. Key factors that affect revenues and profitability include competitive market pressures
from other travel suppliers and distributors, variable contract terms, marketing budget to create awareness, and seasonality.
Leisure travel bookings currently generate the
majority of our nominal revenues. This includes the sale of travel products such as airline tickets, hotel rooms, and cruises as well
as travel services such as travel insurance and ground activities. While we believe this revenue can be accelerated with an enhanced marketing
budget, management has largely focused on supplements to its travel offerings by including travel technology products such as our Travel
Agent and Groups Platforms.
Additionally, offering concierge-level customer
support, trip planning assistance or other premium features can provide peace of mind and added convenience and may result in premium
service fees added to the cost of booking, which represents direct revenue for us.
Advertising
We are building our own media and advertising ecosystem through Travel
Magazine, Journy.tv and Compass.tv. These media platforms are designed to allow users to explore and educate themselves on travel. The
revenue strategy in the media division is two-pronged: (1) as the number of viewers/users grows, it drives the advertising rates we can
charge third-parties to promote travel products and services to our audience and (2) outside of the direct advertising dollars generated
from our media platforms which are expected to become a key driver of higher margin revenue than those earned from travel product sales, as the audience grows it will provide additional opportunities for us to promote ours own travel offerings to highly targeted viewers,
thus lessening the need for spending significant marketing dollars through other mediums to attract consumers.
To drive this initiative, we have entered
into partnerships with Travel Spike and Leap Media Group, respected leaders in the travel category with decades of experience in TV advertising,
media planning and buying. Compass.tv is now equipped to deliver branded entertainment content and advertising seamlessly across its platform,
supported by targeted media strategy designed to optimize revenue well delivering high quality content to travel enthusiasts.
Development of Integrated Revenue Model –
Strategy and Current Status
As we are still in the developmental phase of our commercial operations
and have thus far realized only nominal revenues, the successful execution of our business strategy is predicated upon our capacity to
broaden and deepen our supplier base, cultivate and maintain a robust customer network, and obtain adequate financing to underwrite our
marketing initiatives and continued product development. There can be no assurance that we will be able to accomplish any of these objectives.
We are in the early stages of development and roll
out of our comprehensive travel and media model. While the products introduced to date are now functional and responsible for the current,
nominal revenue generation of the Company, the corresponding revenue streams are currently both small and unpredictable relative to the
established travel industry leaders.
While our core marketing initiatives have been
handicapped due to budget constraints, we have undertaken limited promotions focused on higher margin products, in sought after vacation
regions like Mexico and the Caribbean. Recognizing these marketing budget restraints, we focused our efforts on expanding our product
offering globally with major suppliers, including Expedia and Nuitée, among others. Management believes this was a critical step
to allow for the launch and promotion of specialty travel services like NextTrip’s Groups Platform (i.e. destination weddings, conferences
and conventions), NextTrip Travel Agents Platform and business-focused travel offerings. These types of programs require unique technologies,
broad global inventory offerings, and specialized servicing. Key to this development is the fact that the platforms fall outside of the
typical OTA business model, thereby justifying the supply of travel products from large OTAs, which in turn supports our platforms while
being mutually beneficial to both parties.
37
Our ability to capitalize on existing travel technology platforms is severely
restricted due to the lack of funding to drive marketing programs. Enhancements to the existing platforms along with the introduction
of new programs under development are needed to complete the model. The timeline to complete these programs is dependent upon our ability
to raise capital; however, we believe that most programs can be delivered within 180 days of obtaining such necessary funding. Once fully
functioning, we believe the model will deliver accelerated growth as its “conversion technology” focuses on underserved areas
in the travel sector utilizing platforms (i.e. PayDlay, Groups bookings and Travel Agents) that are not well serviced by the major travel
industry leaders. Additionally, we have introduced engagement and media solutions (i.e. Journy.tv, Compass.tv and Travel Magazine), allowing
users to better plan future travel. We believe a natural extension of providing users with media solutions to assist with travel planning
will further the development and growth of a NextTrip ecosystem. This ecosystem is expected to assist us in reducing external marketing
expenditures while creating a new revenue channel from targeted and timely advertising designed to assist users in their travel planning.
Upon completion of the NextTrip model, we expect to drive revenues from travel solutions outside of the focus of major travel competitors.
We are also engaging Save Your Day Films,
a London-based production company celebrated globally for award-winning factual programming and captivating travel content, as an in-house
production partner to deliver exclusive content as part of our media strategy, driving traffic, cross-promotional opportunities and licensing
revenues.
Recent Developments
Acquisition of Five Star Alliance
On February 6, 2025, the Company entered into
a Membership Interest Purchase Agreement (the “FSA Purchase Agreement”) with FSA Travel, LLC (“FSA”), John McMahon,
as Majority Member, and the other members of FSA included on the signature page thereto (Mr. McMahon together with such other members,
collectively the “FSA Members”). Pursuant to the FSA Purchase Agreement, on February 10, 2025 (the “Initial Closing
Date”), the Company purchased 9,608 membership units of FSA (equal to a 49% ownership stake in FSA immediately after closing) (the
“Initial Interests”) in exchange for the Company’s (i) payment of $500,000 in cash and (ii) issuance of 161,291 shares
of newly designated Series O Nonvoting Convertible Preferred Stock of the Company (“Series O Preferred”) to FSA. In connection
with, and as a condition to, the Initial Closing, the Company entered into employment agreements with Mr. McMahon and Courtney May, each
of whom became employees of the Company as of the Initial Closing Date.
38
In addition, subject to satisfaction of the conditions
discussed below, the FSA Purchase Agreement provided the Company with an option (the “Option”), in its sole discretion, to
purchase the remaining 51% of the membership units from the FSA Members within 60 days of the Initial Closing Date (the “Final Closing
Date”), in exchange for (i) the payment by the Company to the FSA Members of an aggregate of $500,000 in cash and (ii) the issuance
of an aggregate of 161,291 shares of Series O Preferred to the FSA Members (the “Final Closing”). The Company’s Option
was subject to, and contingent upon, satisfaction of the following conditions: (i) the continued employment of Mr. McMahon and Ms. May
by the Company, subject to limited exceptions, (ii) the completion of a $2,000,000 capital raise by the Company, and (iii) the continued
operation of FSA by FSA’s existing management until the Final Closing Date.
On April 9, 2025 (the “Final Closing Date”),
upon FSA’s agreement to waive the capital raise condition to closing, the Company exercised the Option and, in satisfaction of its
obligations under the Purchase Agreement in connection with the Final Closing, the Company paid the FSA Members an aggregate of $500,000
in cash and issued the FSA Members an aggregate of 161,291 shares of Series O Preferred. As a result, as of the Final Closing Date, the
Company acquired the remaining 51% of the membership units in FSA and FSA became a wholly owned subsidiary of the Company.
In addition to the above consideration, the FSA
Purchase Agreement provided that the Company shall make additional payments to the FSA Members upon achievement of certain milestones,
as follows:
1.
The payment of $100,000 in cash and the issuance of 32,258 shares of Series O Preferred at such time as FSA shall have Travel Bookings of Travel Products for five groups by FSA, the commissions to FSA for which are scheduled to be collected after the Final Closing;
2.
The payment of $100,000 in cash and the issuance of 32,258 shares of Series O Preferred at such time as FSA shall have Travel Bookings of cruise related Travel Products, the gross cumulative cost of which to the customers is greater than or equal to $25,000 and the commissions for which are scheduled to collected after the Final Closing;
3.
The payment of $100,000 in cash and issuance of 32,258 shares of Series O Preferred at such time as FSA shall deliver all necessary passcodes to allow NextTrip full remote access to the FSA booking engine for use by NextTrip; and
4.
The payment of $100,000 in cash and issuance 32,258 shares of Series O Preferred at such time as FSA shall have Travel Bookings for Travel Products, the cumulative gross cost of which to the customers is greater than or equal to $1 million and the commissions for which are scheduled to be collected after the Final Closing.
On April 28, 2025, the parties determined that
each of the foregoing milestones had been achieved, and in satisfaction of its obligations under the FSA Purchase Agreement, the Company
paid the FSA Members an aggregate of $400,000 in cash and issued the FSA Members an aggregate of 120,967 shares of Series O Preferred.
Blue Fysh Share Exchange
On February 24, 2025, the Company and Blue Fysh
entered into a share exchange agreement (the “BF Share Exchange Agreement”) whereby Blue Fysh agreed to issue 82 restricted
shares of its common stock to the Company, representing a 10% interest in Blue Fysh, in exchange for 483,000 restricted
shares of Series N Nonvoting Convertible Preferred Stock (the “Series N Preferred”) of the Company at an issuance price of
$5.00 per share (the “BF Share Exchange”). The BF Share Exchange closed on February 28, 2025. The parties entered into the
BF Share Exchange Agreement, creating minority ownership positions between the entities, as part of their mutual efforts to work together
to expand each company’s business opportunities.
Journy.tv Asset Purchase
On April 1, 2025, the Company entered into an
asset purchase agreement (the “Journy.tv Purchase Agreement”) with Ovation LLC (“Ovation”), pursuant to which
the Company purchased assets, including without limitation trademarks, domains, apps and certain agreements, and assumed certain liabilities
related to Ovation’s Journy.tv business (the “Journy.tv Acquisition”). The Journy.tv Acquisition closed on April 1,
2025.
Pursuant to the Journy.tv Purchase Agreement,
as consideration for the Journy.tv Acquisition, the Company paid Ovation $300,000 in cash at closing and issued Ovation 20,000 restricted
shares of Company common stock.
In connection with the Journy.tv Acquisition, on April 1, 2025, the Company
and Ovation also entered into a License Agreement (the “License Agreement”), pursuant to which Ovation granted the Company
the non-exclusive right, throughout the territories and for the term set forth therein, to exhibit, promote, market, advertise, publicize
and/or otherwise exploit the programs listed in the License Agreement in the media of (i) FAST via the Journy.tv Channel and (ii) Video
On Demand via the Journy.tv Channel. Pursuant to the License Agreement, Ovation shall not license any unaffiliated third party the right
to exhibit certain of the programs subject to the License Agreement and shall not use certain of the programs subject to the License Agreement
on its owned or operating streaming platforms (subject to certain exceptions). As consideration for the rights granted under the License
Agreement, the Company agreed to pay Ovation an aggregate non-refundable license fee of $336,801, payable in various tranches through
October 31, 2027. Either party may terminate the License Agreement in the event of a material default by the other party that is not cured
within fifteen days after the defaulting party receives notice of such default.
Strategic Partnership with Intimate Hotels
of Barbados (“IHB”)
On April 3, 2025, we entered into a strategic partnership with IHB, a collection
of over 35 independent hotels and vacation rentals. The Company will serve as the official booking engine for IHB, providing a fully integrated
travel portal and customized packaging tools directly on the IHB website.
39
NextTrip Cruise Launches, Offering Seamless
Cruise Booking Experience
On March 27, 2025, the Company unveiled
NextTrip Cruise, a fully integrated cruise booking engine providing access to over 10,000 sailings and 35 cruise partners. Travelers
benefit from exclusive pricing, concierge service, and bundled packages that include transfers, pre- and post-cruise stays, and
expert travel support.
Changes
to the Board of Directors
On
July 14, 2025, the Company’s Board of Directors adopted a resolution to increase the size of the board from five to seven members
and appointed Bill Kerby, the Company’s Chief Executive Officer, and Andy Kaplan as directors to fill the newly created vacancies,
in each case effective July 17, 2025. Mr. Kerby shall serve as a Class II director of the Company, with his initial
term expiring at the Company’s 2026 Annual Meeting of Stockholders, and Mr. Kaplan shall serve as a Class III director, with his
initial term expiring at the Company’s 2027 Annual Meeting of Stockholders. Each of Messrs. Kerby and Kaplan will serve as a director
for the balance of their respective initial terms, and until his successor is elected and qualified, subject to his earlier death, resignation
or removal. Additionally, effective July 17, 2025, the Board appointed Mr. Kaplan to serve as a member of the Nominations & Governance
Committee of the Board.
Additionally,
in accordance with the Board Appointment Rights provided for in the Exchange Agreement, on July 14, 2025, the Company’s Board of
Directors appointed the NTH Appointees as directors, in each case effective July 28, 2025, at which time Salvatore Battinelli, Jacob
Brunsberg, Dennis Duitch and Kent Summers will resign as directors of the Company. Stephen Kircher shall serve as a Class I director,
with his initial term expiring at the Company’s 2028 Annual Meeting of Stockholders; Jimmy Byrd shall serve as a Class II director,
with his initial term expiring at the Company’s 2026 Annual Meeting of Stockholders; and Ms. Diges and Mr. Jiang shall each serve
as a Class III director, with their initial terms expiring at the Company’s 2027 Annual Meeting of Stockholders. Each of NTH Appointees
will serve as a director for the balance of their respective initial terms, and until his or her successor is elected and qualified,
subject to his or her earlier death, resignation or removal. Additionally, effective July 28, 2025, the Board appointed the NTH Appointees
to serve on the following committees of the Board:
●
Audit Committee : Carmen Diges (Chair), Stephen Kircher and Jimmy Byrd
●
Compensation Committee : Jimmy Byrd (Chair), Stephen Kircher and Carmen Diges
●
Nominations & Governance Committee : David Jiang (Chair) and Carmen Diges
Results
of Operations
Three Months Ended May 31, 2025 Compared to the Three Months Ended May
31, 2024
During the three months ended May 31, 2025, we
recognized revenue of $138,827, as compared to $188,793 in the same period in 2024, a decrease of $49,965, or 27%. The decrease was primarily
due to limited marketing expenditures resulting from cash flow constraints.
Our cost of revenue for the three months ended
May 31, 2025 was $99,921, as compared to $173,581 for the same period in 2024, a decrease of $73,660, or 42%. The decrease was primarily
attributable to the decrease in sales from the first quarter of 2025 as compared to the first quarter of 2024.
Our total operating expenses for the three months
ended May 31, 2025 were $4,678,643, as compared to $1,967,613 for the same period in 2024, an increase of $2,711,030, or 138%. The increase
was primarily attributable to the stock options granted to the board of directors and an increase in professional services expenses.
Salary and benefits costs were $696,914 for the
three months ended May 31, 2025, as compared to $626,752 for the same period in 2024, an increase of $70,162, or 11%. The increase was
comprised of: (a) an increase in salaries and benefits of 25,813 due to the conversion of two Five Star Alliance employees to NextTrip
employees; (b) an increase in taxes and benefits of $29,653 and (c) an increase in SAR expense of $14,696 due to revaluation in April
2025.
Stock-based compensation was $138,325 for the
three months ended May 31, 2025, as compared to $16,394 for the same period in 2024, an increase of $121,931. This increase was primarily
the result of an option grant to an employee that was fully vested on the date of the grant.
We incurred general and administrative costs of
$30,588 during the three months ended May 31, 2025, as compared to $27,555 in the same period in 2024, an increase of $3,033, or 11%.
The increase was primarily the result of a travel expenses incurred for a micro-cap conference in April 2025 of $14,376, partially
offset by a decrease in payroll services fees of $5,627, lower utility expenses of $2,050, and lower license and filing fees of $3,666.
We incurred marketing costs of $90,035
during the three months ended May 31, 2025, as compared to $156,188 during the same period in 2024. The decrease of $66,153, or 42%,
was due to a decrease in contract labor of $26,630, a decrease in Travel Magazine expenses of $23,824, and a decrease in media
advertising of $14,987.
We incurred technology costs of $321,815 during the three months ended
May 31, 2025, as compared to $184,669 during the same period in 2024. The increase of $137,146, or 74%, was primarily attributable to (a)
an increase in expenses in connection with Compass.tv of $93,000; (b) an increase in expense related to Journy.tv of $61,806; (c) an increase
in software expenses of $10,914; (d) an increase in information technology and computer expenses of $8,665; and (e) an increase of $3,324
in cloud database expenses. Partially offsetting these increases is a decrease in dues and subscription expenses of $40,564 in connection
with decreased marketing subscriptions.
Professional service fees incurred in the three
months ended May 31, 2025 were $1,149,476, as compared to $523,873 incurred during the same period in 2024, an increase of $625,603, or
119%. This increase was a result of: (a) an increase in investor relations expenses of $457,350 (b) an increase in accounting expenses
of $94,940 due to the FSA acquisition and timing difference in year-end audit expenses; (c) an increase in outside consulting
fees of $137,326 due to a consulting contract with a strategic business development firm; and (d) an increase in lending fees of $61,500
related to bridge loan financings. Partially offsetting these increases were decreased legal expenses of $94,404, and decreased contract
labor of $31,109.
Organizational costs for the three months ended
May 31, 2025, were $1,999,670, as compared to $28,737 for the same period in 2024, an increase of $1,970,933. The increase is primarily
due to an increase in directors’ compensation related to fully vested stock options issued to the directors during the quarter.
40
Depreciation and amortization expense for the
three months ended May 31, 2025 was $206,650, as compared to $287,586 for the same period in 2024, a decrease of $80,936, or 28%. The
decrease was primarily due to no new equipment purchases and an increase in fully amortized intangible assets as of May 31, 2025.
Other operating expenses were $45,170 for the
three months ended May 31, 2025, as compared to $115,859 for the same period in 2024. The $70,689 decrease was primarily due to the reduced
cost of directors and officers and other insurance costs of $52,268 and a decrease in merchant processing fees of $15,532.
During the three months ended May 31, 2025, we
realized net other income of $193,812, as compared to net other expense of $35,225 in the same period in 2024. The increase in net other
income of $540,245 was primarily due to a settlement agreement between NextTrip Group, LLC and the Company related to misrepresentation
of the collectability of the NextPlay Technologies, Inc. promissory note receivable, partially offset by: (a) a loss of $70,100 related
to the extinguishment of debt, and (b) interest expense of $276,333 primarily in connection the amortization of the debt discount associated
with bridge loans and interest expense associated with notes payable.
Preferred dividends for the three months ended May
31, 2025 were $64,463, as compared to $10,688 for the same period in 2024. The increase was due to dividends paid to the holders of shares
of Series L and Series M Preferred stock issued in connection with debt conversions in December 2024.
In the three months ended May 31, 2025, the net
loss from continuing operations totaled $4,457,232, as compared to a net loss from continuing operations of $1,987,626 for the same period
in 2024. The operating loss component increased by $2,687,335 in 2025, partially offset by an increase in the other income component of
$229,037.
The net loss on the share of net earnings from the equity method investment
was $11,307 due to losses incurred in FSA from March 1, 2025 through April 9, 2025 when the full acquisition was finalized.
The net gain on discontinued operations for the three months ended May
31, 2025 was $0 as compared to $8,909 for the same period in 2024.
Our net loss applicable to common stockholders
for the three months ended May 31, 2025, was $4,521,695, as compared to $1,989,405 for the same period in 2024, an increase of $2,532,290,
or 127%. The increase was primarily attributable to an increase in operating loss from continued operations of $2,687,336 and an increase
in preferred dividends of $53,775, a loss on the 49% share of net earnings for the equity method investee of $11,307, and a decrease in
income from discontinued operation of $8,909, partially offset by an increase in other income of $229,037.
Liquidity and Capital Resources
Due to uncertainties regarding our ability to
meet our current and future operating and capital expenses, there is substantial doubt about our ability to continue as a going concern
for 12 months from the date of the filing of this Quarterly Report,
As of May 31, 2025, we had $130,906 in cash and
a working capital deficit of $1,142,891, as compared to $1,062,367 in cash and a working capital deficit of $105,577 as of February 28,
2025. Additionally, at May 31, 2025, the amount due under our related party line of credit totaled $1, 486,575.
Given the lack of significant revenue since inception, NextTrip has financed
its operations primarily through the issuance of short-term promissory notes, advances from related parties, and private placements of
its securities.
On April 1, 2025, we entered into a
securities purchase agreement (the “Alumni Purchase Agreement”) with Alumni Capital LP (“Alumni”) for the
sale of a short-term promissory note (the “Alumni Note”) and warrants to purchase 80,000 shares of common stock to
Alumni for total consideration of $300,000. The Alumni Note was in the principal amount of $360,000 with an original issue discount
of $60,000 and guaranteed interest on the principal amount of 10% per annum, which was due and payable on July 1, 2025. In the event
of a failure to re-pay the Alumni Note on or before the maturity date, the interest rate would have increased to the lesser of 22%
per annum or the maximum amount permitted under law from the due date thereof until the same was paid. The Alumni Note would have
been convertible into shares of common stock of the Company only upon an event of default. On July 1, 2025, we repaid the
outstanding balance of the Alumni Note in full, including all accrued interest thereon.
On April 9, 2025, we entered into two promissory
notes (together, the “Trust Notes”) with Donald P. Monaco Insurance Trust (the “Trust”) under our $2.0 million
line of credit. Donald Monaco, chairman of our Board, is the trustee of the Trust. The first note had a principal balance of $500,000
and was issued in exchange for a new cash payment provided by Mr. Monaco. The second note had a principal balance of $145,000 and was
issued in exchange for cash advances previously made by Mr. Monaco to the Company.
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On May 6, 2025, we entered
into a Line of Credit Agreement (the “MIP Line of Credit”) with Monaco Investment Partners II, LP (“MIP”) providing
the Company with a $3,000,000 revolving line of credit. The MIP Line of Credit allows the Company to request advances thereunder from
time to time until May 31, 2027, the maturity date. Advances made under the MIP Line of Credit bear simple interest at a rate of 12% per
annum, calculated from the date of each respective advance. Accrued interest shall be payable on a monthly basis, no later than the 10th
day of the subsequent month. The full outstanding principal balance, together with any accrued and unpaid interest, shall be due and payable
in full by the Company on the maturity date. The Company may, at its option, prepay any borrowings under the MIP Line of Credit, in whole
or in part, at any time prior to the maturity date, without penalty. Mr. Monaco controls MIP.
We received an initial advance of $1,045,000
under the MIP Line of Credit, which was used to repay (i) a $400,000 cash advance previously made by the Trust to the Company (ii)
and all outstanding indebtedness under the terms of the Trust Notes, totaling $645,000. Subsequent advances during May 2025 totaled
$441,575, bringing the total outstanding principal at May 31, 2025 to $1,486,575. From June 1, 2025 through July 10, 2025 additional
advances totaled $700,000, and as of July 10, 2025 the outstanding principal balance was $2,186,575.
At May 31, 2025, there were other outstanding short
term notes payable in the aggregate amount of $654,160, which had maturity dates between August 15, 2025 and December 31, 2025.
Subsequent to the quarter ended May 31, 2025, the
Company entered into a securities purchase agreement with an accredited investor, pursuant to which it sold such investor 75,000 restricted
shares of common stock for an aggregate purchase price of $226,500.
We will need to raise additional funds through
equity or debt financings or other means to support our on-going operations, increase market penetration of our products, expand the marketing
and development of our travel and technology driven products, provide capital expenditures for additional equipment and development costs,
payment obligations, and systems for managing the business including covering other operating costs and maintaining compliance with Nasdaq
listing requirements until planned revenue streams are fully implemented and begin to offset the our operating costs. The Company estimates
that it will require a minimum of $5.5 million to continue operations for the next twelve months.
There is no assurance as to the amount and availability
of any required future financing or the terms thereof. Such financing, if in the form of equity, may be highly dilutive to our existing
stockholders and may otherwise include onerous terms. If in the form of debt, such financing may include covenants and repayment obligations
which may be difficult to meet and that could adversely affect our business and operations. To the extent that funds are not available
to us, we may be required to delay, limit, or terminate our business and operations and lose our Nasdaq listing.
Net Cash Used in Operating Activities
Net cash used in operating activities from continuing operations totaled
$1,042,658 during the three months ended May 31, 2025 as compared to $1,151,220 during the same period in 2024, a decrease of $108,562,
or 9.4%.
During the three months ended May 31, 2025, the net cash used in operating
activities was the result of a net loss of $4,457,232 before payment of preferred dividends, partially offset by changes in working capital
of $124,303, and non-cash expenses of $3,290,271 related to stock-based compensation of $2,086,869, depreciation and amortization of $206,650,
amortization of prepaid expenses of $694,912, amortization of debt discount of $231,740 and a loss on the extinguishment of debt of $70,100.
Changes in working capital were driven by an increase in deferred revenue of $210,728, a decrease in prepaid expenses of $183,327, and
the assumption of the SBA EIDL loan from FSA of $98,757, partially offset by an increase in accounts receivable of $87,554 and a decrease
in accounts payable and accrued expenses of $280,955.
During the three months ended May 31, 2024, the net cash used in operating
activities was the result of a net loss of $1,987,626 before payment of preferred dividends, partially offset by changes in working capital
of $532,426, and non-cash expenses of $303,980 related to depreciation and amortization of $287,586 and stock-based compensation of $16,394.
Changes in working capital were driven by a decrease in accounts receivable of $6,322, an increase in deferred revenue of $14,280, and
an increase in accounts payable and accrued expenses of $534,493, partially offset by an increase in prepaid expenses of $19,669.
Net Cash Used in Investing Activities
Net cash used in investing activities during the
three months ended May 31, 2025 was $1,281,503, which compares to $169,406 of cash used in investing activities during the same period
of 2024, an increase of $1,112,097, or 656.5%. The increase resulted from $900,000 related to the acquisition of FSA and $300,000
related to the Journy.tv asset purchase, partially offset by a decrease of $87,903 in capitalized software development costs.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for
the three months ended May 31, 2025 was $1,392,700 as compared to $1,024,591 for the same period in 2024. The increase of $368,109, or
36.0%, was due to an increase in advances from related parties of $275,409 and net increase in notes payable to investors of $92,700.
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Our ability to continue to fund our working capital
needs will be dependent upon the success of our efforts to generate revenues from our operations, and by obtaining additional capital
from the sale of securities or by borrowing funds from lenders to fulfill our business plans. If we issue additional equity or debt securities,
stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those
of existing holders of our common stock. There is no assurance that we will be successful in obtaining additional funding. The Company
is unable to predict the effect a global recession or geopolitical events, including the on-going conflict in Ukraine, may have on its
access to the financing markets. If we fail to obtain sufficient funding when needed, we may be forced to delay, scale back or eliminate
all or a portion of our commercialization efforts and operations.
Other than the related party promissory notes
as described in NOTE 10 – Related Party Transactions to the financial statements included elsewhere in this Quarterly Report, we
have no lines of credit or other financing arrangements.
Inflation, changing prices and rising interest
rates have had no material effect on our continuing operations over our two most recent fiscal years. However, continued unfavorable trends
may affect the prices we pay for materials and other goods and services necessary to our business, thus increasing our use of cash.
We have no off-balance sheet arrangements as defined
in Item 303(a) of Regulation S-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.
Not applicable.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.