NextPlat Corp 10-K

Item 9A. Controls and Procedures. Management ’ s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures Evaluation of disclosure controls and procedures. Based on management’s evaluation (with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO)), as of the end of the period covered by this report, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15I and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Inherent Limitations on Controls. Management, including the CEO and CFO, does not expect that our disclosure controls and procedures will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to errors or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Management ’ s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting includes policies and procedures that: (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Our internal control over financial reporting is a process designed with the participation of our principal executive officer and principal financial officer or persons performing similar functions to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment our management believes that, as of December 31, 2023, our internal control over financial reporting is effective under those criteria. Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during our fourth fiscal quarter ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules from the SEC that permit us to provide only management’s report in this annual report. Progressive Care became a consolidated subsidiary of the Company on July 1, 2023. As permitted by guidance issued by the SEC, companies are allowed to exclude certain acquisitions from their assessment of internal control over financial reporting during the first year following an acquisition. Accordingly, Management’s Report on Internal Control over Financial Reporting excludes Progressive Care from management’s assessment of the Company’s internal control over financial reporting as of December 31, 2023. The Progressive Care acquisition represented approximately 63% of total consolidated assets at December 31, 2023 and approximately 71% of our total consolidated revenue for the year ended December 31, 2023. Item 9B. Other Information. Rule 10b5 - 1 Trading Arrangement During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated any “Rule 10b5 - 1 trading arrangement” or “non-Rule 10b5 - 1 trading arrangement,” as each term is defined in Item 408 (a) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 72 Table of Contents PART III. Item 10. Directors , Executive Officers and Corporate Governance. The following table sets forth the names and ages of all of our directors and executive officers as of March 26, 2024. Our officers are appointed by, and serve at the pleasure of, the Board. Name Age Position Charles M. Fernandez 62 Executive Chairman, Chief Executive Officer, Director Cecile Munnik 46 Chief Financial Officer Robert Bedwell 65 Chief Compliance Officer David Phipps 58 President and Chief Executive Officer of Global Operations, Director Douglas S. Ellenoff 64 Vice Chairman and Chief Business Development Strategist, Director Rodney Barreto 66 Director Hector Delgado 55 Director Kendall W. Carpenter 68 Director Louis Cusimano 77 Director John E. Miller 82 Director Maria Cristina Fernandez 58 Director Charles M. Fernandez , Executive Chairman, Chief Executive Officer, Director Mr. Fernandez has served as Executive Chairman of the Company since May 28, 2021 and Chief Executive Officer of the Company since June 2, 2021. Prior to joining the Company Mr. Fernandez was a co-founder and the Chairman of Kempstar (a large-scale marketer of energy and agricultural commodities) from November 2015 through June 2020; a member of the Supervisory Board of Smartrac (a RFID products and IoT solutions) from January 2019 through March 2020; Chief Executive Officer of eApeiron Solutions (a brand protection and e-commerce company) from June 2016 through December 2018; served as the founder and Chief Investment Officer of Barnstar Funds, LP (a fund established in 2012 for investment in special situations across the capital markets) from October 2012 through March 2016; and co-founder and Chairman of Lakeview Health Systems, LLC (a private pay, specialized hospital company) from December 2003 through December 2012. Mr. Fernandez was chosen to serve as a director of the Company based on his 30 years’ experience identifying profitable start-up and dislocation opportunities, building significant value and executing both private and public exit strategies. Cecile Munnik, Chief Financial Officer Ms. Munnik has served as Chief Financial Officer of the Company since November 14, 2022. Ms. Munnik also serves as Chief Financial Officer of Progressive Care, a position she has held since October 2020. Ms. Munnik has over fifteen years of accounting and finance experience, and has served in finance and accounting leadership positions for companies and business units with annual revenues ranging from $100M to $3B. Prior to joining Progressive Care, Ms. Munnik served as Director of Asset Management at Unified Women’s Healthcare, a single-specialty management services organization to support Ob-Gyn practices from November 2018 through April 2020. She joined The Service Companies as Director of Finance in May 2017 through October 2018. Prior to The Service Companies, she worked at Lennox International for eleven years. She joined Lennox in June 2006 as Sr. Internal Auditor and left in May 2017 as Manager of Financial Planning and Analysis. Ms. Munnik has a bachelor’s degree in accounting from the University of Pretoria (South Africa) and is a Certified Public Accountant (CPA) and Chartered Accountant (CA). She serves on the board of Damascus Road Partners, which is a group of social enterprise investors who invest charitable capital to sustainably address human suffering. We believe Ms. Munnik is well-qualified to serve as Chief Financial Officer of the Company based on her extensive accounting and finance experience, serving for more than fifteen years in finance and accounting leadership positions for companies and business units. Robert Bedwell, Chief Compliance Officer Mr. Bedwell has served as Chief Compliance Officer of the Company since November 7, 2022. Prior to joining the Company, Mr. Bedwell served as Director of Administrative Services at Progressive Care, from October 2020 to the present, where he worked on contractual, legal, and compliance matters, and as their Controller from January 2017 until September 2020. From 2011 to 2016, Mr. Bedwell served as an Audit Partner or Director at several national and regional public accounting firms. Mr. Bedwell has also been a national speaker and instructor on numerous topics for Surgent Professional Education, the Florida Institute of Certified Public Accountants, and the American Institute of Certified Public Accountants. Mr. Bedwell holds a bachelor’s degree in Accounting and Finance from Upsala College in East Orange, New Jersey, and a Masters in Accounting from Florida Atlantic University. Mr. Bedwell is also a Certified Public Accountant. We believe Mr. Bedwell is well-qualified to serve as Chief Compliance Officer of the Company based on his more than forty-two years of audit, accounting, financial reporting, and compliance experience. 73 Table of Contents David Phipps, President and Chief Executive Officer of Global Operations and Director Mr. Phipps has served as Chief Executive Officer of Global Operations since June 2, 2021, and as Director since February 24, 2015. Mr. Phipps has also served as Managing Director of the Company’s wholly owned UK subsidiary, Global Telesat Communications LTD (“GTC”), since 2008. Mr. Phipps previously served as Chairman of the Board from February 24, 2015 until June 2, 2021, and Chief Executive Officer from February 25, 2015 until June 2, 2021. Mr. Phipps has over twenty years of experience in the communications industry, during which time he has overseen acquisitions, mergers and capital raising activities. Mr. Phipps also has 35 years of experience in investment management, finance, and operational roles at several private and public companies. . We believe Mr. Phipps is well-qualified to serve as President and Chief Executive Officer of Global Operations and Director of the Company based on his depth of knowledge and experience in the communications industry. Douglas S. Ellenoff, Vice Chairman and Chief Business Development Strategist and Director Mr. Ellenoff has served as Vice Chairman and Chief Business Development Strategist of the Company since August 24, 2021. Mr. Ellenoff is a partner at Ellenoff Grossman, & Schole LLP, a law firm based in New York City with more than 120 professionals, which he founded in 1992. Mr. Ellenoff’s practice is concentrated in corporate and securities, with a focus in business transactions, mergers and acquisitions, and corporate financings. Mr. Ellenoff has represented companies in connection with their initial public offerings, secondary public offerings, PIPEs, crowdfunding, regulatory compliance, as well as strategic initiatives and general corporate governance matters. Mr. Ellenoff has also served as Managing Member at ESQVest LLP, a venture capital firm that invests in early-stage legal technology companies, since its founding in 2014. We believe Mr. Ellenoff is well-qualified to serve as Vice Chairman and Chief Business Development Strategist of the Company based on his broad experience in capital markets and corporate governance matters. Rodney Barreto, Director Mr. Barreto has served on the Board of Directors since January 20, 2022. He is currently President and Chief Executive Officer of the Barreto Group and of Barreto Hospitality, which he founded in 1988 and 2020, respectively. The Barreto Group is a diversified company specializing in corporate and public affairs consulting, real estate investment, and development. Barreto Hospitality is the food, beverage, and hospitality arm of the Barreto Group boasting fine dining and entertainment venues across South Florida. Mr. Barreto is also a partner of Capital City Consulting Miami, LLC, a leading public affairs and governmental consulting firm in the State of Florida. Capital City Consulting develops and manages effective corporate and public affairs strategies designed to achieve specific business results for its clients. Mr. Barreto is also the Chief Executive Officer of Barreto Capital, LLC, a private money lender, since November 2018. Mr. Barreto is also the Chairman of the Miami Super Bowl Host Committee, which he has chaired a record three times in the years 2007, 2010, and 2020. The perennial Chairman, Mr. Barreto also serves as Chairman of the Florida Fish and Wildlife Conservation Commission having been appointed by three Florida Governors, namely Governor Jeb Bush, Governor Charlie Crist, and current Florida Governor Ron DeSantis. We believe Mr. Barreto is well-qualified to serve as a director of the Company based on his significant leadership and entrepreneurial experience. Hector Delgado , Director Mr. Delgado has served on the Board of Directors since May 27, 2015. Lieutenant Commander Delgado is a retired United States Navy SEAL, with over twenty-nine years of active and reserve service. In 2006, he was mobilized with SEAL Team THREE for a combat tour in Ramadi, Iraq, receiving a Navy Commendation Medal with Combat “V”. He has served with SEAL Teams TWO, THREE, FOUR, EIGHTEEN and Special Operations Command Central and South. His tours of duty have included the Middle East, Europe, Africa and South America. Mr. Delgado has a wealth of expertise that has been refined not only in a military environment, but also extensively in the governmental sector, where he has been responsible for budgets, training, and logistics for thousands of people. He has trained thousands of students in the use of weapons, demolition, physical security and executive protection. Mr. Delgado is also a retired Special Agent with Homeland Security Investigations (HSI), Palm Beach County, Florida. Throughout his career, Special Agent Delgado served in a number of positions including being a member of the Joint Terrorism Task Force (JTTF), Miami field office. Over the past fifteen years Mr. Delgado has conducted Active Shooter Response Training seminars around the country and is recognized as an expert in this field. He has served on Governor DeSantis’s Committee on Public Safety during the Governor’s transition. Mr. Delgado is also a successful entrepreneur and patent holder, having started, managed, and sold numerous enterprises. He is co-founder of ASR Alert Systems, a newly developed technology designed to drastically enhance response time of law enforcement and victims in an active shooter event. The ASR Threat Alert System simultaneously alerts law enforcement, end users of the system, 911-disptach, and nearest trauma hospitals within seconds. Mr. Delgado’s core values of honesty, integrity, and generosity are what have helped propel him to his current success. These same qualities inspire him to give back to the communities in which he resides. He mentors teenagers who make career decisions to enlist in the military and he sits on the Naval Academy selection board on behalf of Senator Marco Rubio. As a member of the Board of Directors of the National Navy SEAL Museum, Mr. Delgado plays an instrumental role in the Museum’s continued growth and development. 74 Table of Contents Kendall W. Carpenter, Director Ms. Carpenter has served on the Board of Directors since May 28, 2021. From 2006 to 2019, Ms. Carpenter was Chief Financial Officer, Executive Vice-President, Secretary, and Treasurer of ComSovereign Holding Corp. (COMS) and its predecessor entities, a Nasdaq company in the aviation industry, where she was responsible for SEC compliance and reporting, accounting, audit, banking, HR and benefits, payroll, corporate administration, board governance, legal, contracts, and risk management. Ms. Carpenter holds a bachelor’s degree in Accounting from Oklahoma State University, and a Certified Public Accountant (CPA) license (inactive) in the State of Oklahoma. Ms. Carpenter is also a Certified Management Accountant (CMA) and Chartered Global Management Accountant (CGMA). We believe Ms. Carpenter is well-qualified to serve as a director of the Company based on her leadership positions in public companies, as well as her expertise in compliance and finance. Louis Cusimano , Director Mr. Cusimano has served on the Board of Directors since May 28, 2021. Mr. Cusimano’s dual career with the Federal Aviation Administration (FAA) and the United States Air Force Reserve (USAF) spanned three decades of continuous service. Prior to retiring from the FAA in May 2003, Mr. Cusimano was a Senior Executive and Deputy Director of the FAA’s Flight Standards Service. In this role, Mr. Cusimano maintained close and continuous liaison with representatives of Congress, the aviation industry, the general public, all air carriers, the national military establishment, other federal agencies, foreign flight operations, and airworthiness authorities. Mr. Cusimano also served as “Acting Director” and Division Manager of the Air Transportation Division and Certification and Surveillance Division at the FAA. Mr. Cusimano also had a parallel career as an Air Force officer and pilot for 30 years. Mr. Cusimano attained the rank of full colonel, and retired as Wing Commander, 459 th Airlift Wing. Mr. Cusimano was a senior ranking officer in charge of over 1,400 reservists and nine C-141B/C strategic airlift aircraft, which conducted world-wide combat airlift and airlift support missions for the Air Mobility Command. Mr. Cusimano is a highly decorated officer and retired with honors on June 1, 2000. Mr. Cusimano holds an airline transport pilot certificate, flight engineer certificate, and flight instructor certificate with fixed wing, rotorcraft, and instrument instructor ratings. Mr. Cusimano is also a certified A&P Mechanic with Inspector Authorization authority. Mr. Cusimano earned a bachelor’s degree in Experimental Psychology from Hofstra University in 1969 and completed National Security Management School in 1987. Mr. Cusimano has held top secret clearances at the FAA and with the Air Force. Mr. Cusimano is certified as an ISO-9000:2000 Auditor with the International Register of Certificated Auditors. We believe Mr. Cusimano is well-qualified to serve as a director of the Company based on his more than thirty-five years of experience in government and professional roles. John E. Miller, Director Mr. Miller has served on the Board of Directors since May 28, 2021. Mr. Miller has served as the owner/consultant at Miller Analytics, LLC since September 2007. From December 2017 to November 2019, Mr. Miller served as a member of the board of directors of Drone Aviation Holding Corp. Prior to this, Mr. Miller served over thirty-four years in the US Army. Commissioned as an Infantry Officer, he served in line units, staff positions, and Army Schools, and attained the title of Lieutenant General before retiring. Mr. Miller had multiple assignments at the US Army Command and General Staff College, where he taught Tactics and Wargaming Instructor and served as the Deputy Commandant, and later Commandant. Mr. Miller holds a bachelor’s degree in Mathematics from Missouri State University and a master’s degree in Operations Research from Georgia Tech. Mr. Miller is also a graduate of the Army Command and General Staff College and the Army War College. Mr. Miller attended Executive Development programs at Yale University, the Menninger Foundation and Leadership at the Peak in Denver, CO. We believe Mr. Miller is well-qualified to serve as a director of the Company based on his leadership, knowledge of, and relationships in aerospace industries, as well as his familiarity with the military and governmental agencies. Maria Cristina Fernandez, Director Ms. Fernandez was appointed to the Board of Directors on September 28, 2022. Ms. Fernandez has extensive experience in achieving growth with new technologies, and motivating teams and customers in challenging business environments. She also has extensive international experience leading global and regional teams in the US, Latin America and Asia. Prior to joining NextPlat, Ms. Fernandez served as the Executive Vice President and Chief Operating Officer of eApeiron Solutions from May 2016 to July 2019 . Before that, Ms. Fernandez served as the Global Vice President/General Manager of Xerox Corporation’s Continuous Feed Inkjet Business, from July 2015 to May 2016. No director is related to any other director or executive officer of our company or our subsidiaries, and, there are no arrangements or understandings between a director and any other person pursuant to which such person was elected as director. 75 Table of Contents Involvement in Certain Legal Proceedings During the past ten years, none of our officers, directors, promoters or control persons have been involved in any legal proceedings as described in Item 401(f) of Regulation S-K. Delinquent Section 16(a) Reports Based solely upon a review of reports on Forms 3, 4 and 5 and any amendments thereto furnished to the Company pursuant to Section 16 of the Exchange Act, the Company believes that each of the following reporting persons failed to timely file a Section 16(a) report during the fiscal year ended December 31, 2023: Name Number of Late Reports Number of Transactions that were Not Reported on a Timely Basis Charles M. Fernandez 4 5 Kendall W. Carpenter 1 1 Maria Cristina Fernandez 1 1 Louis Cusimano 1 1 Hector Delgado 1 1 John E. Miller 1 1 Code of Business Conduct and Ethics The Board has adopted a Code of Business Conduct and Ethics that is applicable to the Company and to all our directors and officers and persons performing similar functions, including our principal executive officer and principal financial officer. A copy of the Company’s Code of Ethics may be obtained on our website at www.NextPlat.com. We intend to disclose future amendments to such code, or any waivers of its requirements, applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions or our directors on our website identified above. The inclusion of our website address in this Annual Report on Form 10-K does not include or incorporate by reference the information on our website into this Annual Report on Form 10-K. Audit Committee of the Board of Directors The members of the Audit Committee are Rodney Barreto, Maria Cristina Fernandez, and Louis Cusimano. Each member of the Audit Committee is independent as defined by the Nasdaq Rules. Rodney Barreto is the Chairperson of the Audit Committee. In addition, each member of the Audit Committee satisfies the additional requirements of the SEC and Nasdaq Rules for audit committee membership, including the additional independence requirements and the financial literacy requirements. The Board has determined that at least one member of the Audit Committee, Mr. Barreto, is an “audit committee financial expert” as defined in the SEC’s rules and regulations. The primary purpose of the Audit Committee is to oversee the quality and integrity of our accounting and financial reporting processes and the audit of our financial statements. The Audit Committee is responsible for selecting, compensating, overseeing and terminating the selection of our independent registered public accounting firm. 76 Table of Contents Item 11. Executive Compensation Executive Officer Compensation Our named executive officers for the years ended December 31, 2023 and 2022, which consist of our principal executive officer and our two other most highly compensated executive officers, are: (i) Charles M. Fernandez, our chief executive officer and executive chairman; (ii) David Phipps, our president and chief executive officer of global operations, and (iii) Douglas Ellenoff, our vice chairman and chief business development strategist. Summary Compensation Table The table below summarizes all compensation awarded to, earned by, or paid to our named executive officers (as defined in Item 402(m)(2) of Regulation S-K) for the fiscal years ended December 31, 2023 and December 31, 2022. Name and Principal Position Year Salary ($) Bonus ($)(1) Stock Awards ($)(2) Option Awards ($)(2) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings($) All Other Compensation ($)(3) Total ($) Charles M. Fernandez Chief Executive Officer and Chairman (3)(4) 2023 $ 468,000 $ 286,000 $ 1,931,000 $ 490,000 $ - $ - $ 99,000 $ 3,274,000 2022 $ 350,000 $ 36,000 $ 1,755,000 $ 248,000 $ - $ - $ 73,000 $ 2,462,000 David Phipps President of NextPlat and Chief Executive Officer of Global Operations. Former* Chief Executive Officer and Chairman of NextPlat (3)(5) 2023 $ 350,000 $ 36,000 $ - - $ - $ - $ 16,000 $ 402,000 2022 $ 355,000 $ 36,000 $ - - $ - $ - $ 15,000 $ 406,000 Douglas Ellenoff Vice Chairman and Chief Business Development Strategist (6) 2023 $ - $ - $ 137,000 $ 619,000 $ - $ - $ - $ 756,000 2022 $ - $ - $ 107,000 $ 486,000 $ - $ - $ - $ 593,000 *For information regarding the Company’s current executive officers is provided above in the section entitled “ Information About Directors and Executive Officers .” (1) On October 7, 2021, on the approval and recommendation of the Compensation Committee, the Board approved a plan to make bonus payments of $3,000 per month (each, a “Monthly Bonus”) to each of Mr. Fernandez and Mr. Phipps. The Monthly Bonus payments were approved in recognition of Messrs. Fernandez’s and Phipps’ contributions to the Company. The Monthly Bonus payments will renew on a quarterly basis until terminated by the Board upon 30 days’ prior notice to Messrs. Fernandez and Phipps. (2) Amounts shown in the “Stock Awards” and “Option Awards” column reflect the aggregate grant date fair value calculated in accordance with FASB ASC 718 for the respective fiscal year with respect to stock options granted to our named executive officers. Amounts reflect our accounting for these option grants and do not necessarily correspond to the actual values that may be realized by our named executive officers. The grant date fair values of these option grants were calculated at the grant date using the Black-Scholes option pricing model. The assumptions used for the valuations are set forth in Note 20 – Stock-Based Compensation in the Notes included in the Annual Report. Pursuant to SEC rules, we disregarded the estimates of forfeitures related to service-based vesting conditions. (3) Categories and values of compensation reported in “All Other Compensation” are set forth in the following table: 77 Table of Contents Name Year Health Insurance Coverage ($) Automobile Allowance ($) Allowance Towards Professional Fees ($) Allowance Towards Travel Fees ($) Board of Director Compensation ($) Total ($) Charles M. Fernandez 2023 $ 67,000 $ 12,000 $ 10,000 $ 10,000 $ - $ 99,000 2022 $ 51,000 $ 12,000 $ 10,000 $ - $ - $ 73,000 David Phipps 2023 $ 4,000 $ 12,000 $ - $ - $ - $ 16,000 2022 $ 3,000 $ 12,000 $ - $ - $ - $ 15,000 Douglas Ellenoff 2023 $ - $ - $ - $ - $ - $ - 2022 $ - $ - $ - $ - $ - $ - (4) Mr. Fernandez has served as the Company’s Executive Chairman since May 28, 2021 and its Chief Executive Officer since June 5, 2021. Mr. Phipps served as the President of the Company since February 19, 2015 and as a member of the Board since February 24, 2015, and Chairman of the Board from February 24, 2015 until May 23, 2021 and Chief Executive Officer of the Company from February 25, 2015 to June 5, 2021. Mr. Fernandez received the following equity awards in 2023: ● Award of 39,000 shares of restricted common stock of the Company on February 28, 2023. All shares were fully vested and issued on the grant date. ● Award of 325,000 shares of restricted common stock of the Company on April 3, 2023. All shares were fully vested an issued on the grant date. ● Award of options to purchase 200,000 shares of common stock of the Company on April 14, 2023 at an exercise price of $2.45 per share. The option has a five year term and was fully vested upon the grant date. Mr. Fernandez received the following equity awards in 2022: ● Issuance of 200,000 shares of restricted common stock of the Company pursuant to Mr. Fernandez’s Employment Agreement (“the June Agreement”). All shares were fully vested and issued on the Effective Vesting Date, which was May 28, 2022. ● Award of 116,000 shares of restricted common stock of the Company under the 2021 Plan. All shares were fully vested and issued on the Effective Grant Date, which was September 20,2022. ● Award of an option under the 2021 Plan to buy 70,000 shares of Company common stock at an exercise price of $2.13 per share. The option fully vested on July 1, 2022.The option has a term of 10 years. (5) Mr. Fernandez received an additional cash bonus of $250,000 in 2023. (6) Mr. Ellenoff received the following equity awards pursuant to his Employment Agreement, dated August 24, 2021, by and between the Company and Mr. Ellenoff (the “Ellenoff Employment Agreement”), ● Under the terms of the Ellenoff Employment Agreement, Mr. Ellenoff was awarded, in lieu of cash compensation: (i) a restricted stock award of 100,000 shares of Common Stock of the Company, 40,000 of which were issued on September 9, 2021, and vested immediately, with an additional 20,000 shares of restricted stock to be issued and to vest on each of August 24, 2022, August 24, 2023 and August 24, 2024, provided Mr. Ellenoff continues to serve on the Board of Directors at any time during the year in which the restricted stock is to vest, (ii) options to purchase a total of 1,500,000 shares of the Company’s Common Stock, 300,000 of which were vested immediately, 150,000 of which will vest on each of the next three annual anniversaries of the commencement of his employment, and the remaining 750,000 of which will vest at the rate of 250,000 per year on each of the first three anniversaries of the commencement of his employment if during each such year Mr. Ellenoff introduces the Company to twelve (12) or more potential Business Transactions (as defined in the Ellenoff Agreement and which transactions need not be consummated); provided that the Company’s Chief Executive Officer may, in his sole discretion, waive the vesting requirement in any given year. Such options will have an exercise price of $5.35 per share and will terminate 5 years after they vest. These equity awards to Mr. Ellenoff were material to induce Mr. Ellenoff to enter into the Ellenoff Agreement and were issued outside of a shareholder approved stock or option plan pursuant to the Nasdaq “inducement grant” exception (Nasdaq Listing Rule 5635I(4)). 78 Table of Contents Narrative to Summary Compensation Table Annual Base Salary The terms of Mr. Phipps compensation are set forth in his Employment Agreement, dated June 5, 2021, which was effective June 2, 2021 (as amended, the “2021 Phipps Agreement”), which sets Mr. Phipps’ annual base compensation at $350,000. The terms of Mr. Fernandez’s compensation are set forth in his Employment Agreement, dated June 2, 2021 (as amended, the “June Agreement”), which sets Mr. Fernandez’s annual base compensation at $525,000. The terms of Mr. Ellenoff’s compensation are set forth in the Ellenoff Employment Agreement which provides for equity compensation in lieu of a base cash compensation arrangement. The 2021 Phipps Employment Agreement, the June Agreement and the Ellenoff Employment Agreement are described below under the section titled “ Employment Agreements ”. For the years ended December 31, 2023 and 2022, the Company recorded stock-based compensation of approximately $5.4 million and $3.0 million, respectively. Long-Term Incentives 2018 Incentive Plan On June 14, 2018, our Board of Directors approved the 2018 Incentive Plan (the “2018 Plan”). The purpose of the 2018 Plan is to provide a means for the Company to continue to attract, motivate and retain management, key employees, consultants and other independent contractors, and to provide these individuals with greater incentive for their service to the Company by linking their interests in the Company’s success with those of the Company and its shareholders. An award may also be granted to any consultant, agent, advisor or independent contractor for bona fide services rendered to the Company or any Related Company (as defined in the 2018 Plan) that; are not in connection with the offer and sale of the Company’s securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s securities. The 2018 Plan is administered by the Board or its Compensation Committee and may grant Options designated as Incentive Stock Options or Nonqualified Stock Options. The 2018 Plan provides that up to a maximum of 13,333 shares of the Company’s common stock (subject to adjustment) are available for issuance under the 2018 Plan. Subject to earlier termination in accordance with the terms of the 2018 Plan and the instrument evidencing the option, the maximum term of an incentive stock option shall not exceed ten years, and in the case of an incentive stock option granted to a Ten Percent Stockholder (as defined in the 2018 Plan), shall not exceed five years. Any portion of an option that is not vested and exercisable on the date of a plan participant’s Termination of Service (as defined in the 2018 Plan) shall expire on such date. In the event of a Change in Control (as defined in the 2018 Plan); all outstanding awards, other than performance shares and performance units, shall become fully and immediately exercisable, and all applicable deferral and restriction limitations or forfeiture provisions shall lapse, immediately prior to the Change in Control and shall terminate at the effective time of the Change in Control; provided, however, that with respect to a Change in Control that is a Company Transaction (as defined in the 2018 Plan), such awards shall become fully and immediately exercisable, and all applicable deferral and restriction limitations or forfeiture provisions shall lapse, only if and to the extent such awards are not converted, assumed or replaced by the Successor Company (as defined in the 2018 Plan). Amended and Restated 2020 Equity Incentive Plan On August 21, 2020, the Company’s Board of Directors approved and adopted the Company’s 2020 Equity Incentive Plan (the “2020 Plan”) in order to provide a means for the Company to continue to attract, motivate and retain management, key employees, directors and consultants. On December 31, 2021, the Company’s Board of Directors approved and adopted an amendment that increased the number of shares available for issuance under the 2020 Plan from 450,000 shares to 800,000 shares of the Company’s common stock. On August 10, 2021, the Company’s Board of Directors further amended the 2020 Plan and adopted and approved an Amended and Restated 2020 Equity Incentive Plan (the “A&R 2020 Plan”), in order to, among other things: (i) clarify that the exercise price of stock options will be set at “Fair Market Value,” and (ii) make conforming revision to reflect the 1-for-5 reverse split that was effective on May 28, 2021. The A&R 2020 Plan was approved by the Company’s stockholders on December 16, 2021, at the Company’s 2021 Annual Meeting of Stockholders. The A&R 2020 Plan provides for discretionary awards of, among others, stock options, stock awards, stock unit awards and stock appreciation rights to participants. Each award made under the A&R 2020 Plan will be evidenced by a written award agreement specifying the terms and conditions of the award as determined by the Committee in its sole discretion, consistent with the terms of the A&R 2020 Plan. All employees, directors, and consultants of the Company and its subsidiaries are eligible to receive awards under the A&R 2020 Plan. The A&R 2020 Plan is administered by the “Committee” which is defined in the A&R 2020 Plan as the Compensation Committee of the Board or such other committee as may be designated by the Board from time to time to administer the Plan, or, if no such committee has been designated at the time of any grants, it shall mean the Board. The number of shares of common stock that may be issued under the A&R 2020 Plan is 800,000. Shares issuable under the A&R 2020 Plan may be authorized but unissued shares or treasury shares. If there is a lapse, forfeiture, expiration, termination or cancellation of any award made under the A&R 2020 Plan for any reason, the shares subject to the award will again be available for issuance. Any shares subject to an award that are delivered to us by a participant, or withheld by us on behalf of a participant, as payment for an award or payment of withholding taxes due in connection with an award will not again be available for issuance, and all such shares will count toward the number of shares issued under the A&R 2020 Plan. The number of common shares issuable under the A&R 2020 Plan is subject to adjustment, in the event of any reorganization, recapitalization, stock split, stock distribution, merger, consolidation, split-up, spin-off, combination, subdivision, consolidation or exchange of shares, any change in the capital structure of the company or any similar corporate transaction. In each case, the Committee has the discretion to make adjustments it deems necessary to preserve the intended benefits under the A&R 2020 Plan. No award granted under the A&R 2020 Plan may be transferred, except by will, the laws of descent and distribution. 79 Table of Contents The maximum number of shares subject to Awards granted under the A&R 2020 Plan or otherwise during any one calendar year to any Director for service on the Board (other than to Mr. Phipps and the Company’s CEO and President, if serving on the Board, to whom no annual limit is applicable), taken together with any cash fees paid by the Company to such Director during such calendar year for service on the Board, will not exceed $100,000 in total value (calculating the value of any such Awards based on the grant date fair value or such value as determined by the Board, at its discretion, of such Awards for financial reporting purposes). The Committee may amend any award agreement at any time, provided that no amendment may adversely affect the right of any participant under any agreement in any material way without the written consent of the participant, unless such amendment is required by applicable law, regulation or stock exchange rule. The Board may terminate, suspend or amend the A&R 2020 Plan, in whole or in part, from time to time, without the approval of the shareholders, unless such approval is required by applicable law, regulation or stock exchange rule, and provided that no amendment may adversely affect the right of any participant under any outstanding award in any material way without the written consent of the participant, unless such amendment is required by applicable law, regulation or rule of any stock exchange on which the shares are listed. Notwithstanding the foregoing, neither the A&R 2020 Plan nor any outstanding award agreement can be amended in a way that results in the repricing of a stock option. Repricing is broadly defined to include reducing the exercise price of a stock option or cancelling a stock option in exchange for cash, other stock options with a lower exercise price or other stock awards. No awards may be granted under the A&R 2020 Plan on or after the tenth anniversary of the effective date of the A&R 2020 Plan. 2021 Incentive Award Plan The Company’s Board of Directors approved and adopted the 2021 Incentive Award Plan (“2021 Plan”), subject to stockholder approval, on August 10, 2021. The 2021 Plan was approved by the Company’s stockholders on December 16, 2021, at the Company’s 2021 Annual Meeting of Stockholders. The purpose of the 2021 Plan is to enhance the Company’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company and its subsidiaries by providing these individuals with equity ownership opportunities. The number of shares initially available for issuance under awards granted pursuant to the 2021 Plan is 768,819 shares of common stock. The number of shares initially available for issuance will be increased on January 1 of each calendar year beginning in 2022 and ending in 2031, by an amount equal to the lesser (A) an amount such that the resulting sum (the new “Overall Share Limit”) is equal to 12% of the aggregate number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares of Common Stock as is determined by the Board. Shares issued under the 2021 Plan may be authorized but unissued shares, shares purchased in the open market or treasury shares. If an award under the 2021 Plan expires, lapses or is terminated, exchanged for cash, surrendered to an exchange program, repurchased, cancelled without having been fully exercised or forfeited, any shares subject to such award will, as applicable, become or again be available for new grants under the 2021 Plan. All employees, directors, and consultants of the Company and its subsidiaries are eligible to receive awards under the 2021 Plan. As of December 31, 2022, eighteen individuals are eligible to receive awards under the 2021 Plan. The 2021 Plan is generally administered by the Board, which may delegate its duties and responsibilities to committees of Board and or officers of the Company (referred to collectively as the “plan administrator”). The plan administrator will have the authority to make all determinations and interpretations under, prescribe all forms for use with, and adopt rules for the administration of, the 2021 Plan, subject to its express terms and conditions. The plan administrator will also set the terms and conditions of all awards under the 2021 Plan, including any vesting and vesting acceleration conditions. The plan administrator may also institute and determine the terms and conditions of an “exchange program,” which could provide for the surrender or cancellation, transfer, or reduction or increase of exercise price, of outstanding awards, subject to the limitations provided for in the Incentive Award Plan. The 2021 Plan provides for the grant of stock options, including incentive stock options, or ISOs, and nonqualified stock options, or NSOs; restricted stock; dividend equivalents; restricted stock units, or RSUs; stock appreciation rights, or SARs; and other stock or cash-based awards. All awards under the 2021 Plan will be set forth in award agreements, which will detail the terms and conditions of the awards, including any applicable vesting and payment terms and post-termination exercise limitations. Other Stock or Cash Based Awards may be granted to participants, including awards entitling participants to receive Shares to be delivered in the future and including annual or other periodic or long-term cash bonus awards (whether based on specified performance criteria or otherwise), in each case subject to any conditions and limitations in the 2021 Plan. The plan administrator will determine the terms and conditions of other stock or cash-based awards. Performance awards include any of the foregoing awards that are granted subject to vesting and/or payment based on the attainment of specified performance goals or other criteria the plan administrator may determine, which may or may not be objectively determinable. Performance criteria upon which performance goals are established by the plan administrator. In connection with certain transactions and events affecting the Company’s Common Stock, including a change in control (as defined in the 2021 Plan), or change in any applicable laws or accounting principles, the plan administrator has broad discretion to take action under the 2021 Plan to prevent the dilution or enlargement of intended benefits, facilitate such transaction or event, or give effect to such change in applicable laws or accounting principles. This includes canceling awards in exchange for either an amount in cash or other property with a value equal to the amount that would have been obtained upon exercise or settlement of the vested portion of such award or realization of the participant’s rights under the vested portion of such award, accelerating the vesting of awards, providing for the assumption or substitution of awards by a successor entity, adjusting the number and type of shares available, replacing awards with other rights or property and/or terminating awards under the 2021 Plan. 80 Table of Contents Equity Awards The following table sets forth certain information concerning equity awards for our named executive officers at December 31, 2023. The market values of the Stock Awards reported in this table are calculated based on the closing market price of the Common Stock on Nasdaq on December 29, 2023, which was $1.65 per share. Outstanding Equity Awards At Fiscal Year-End Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options(#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($)\ Option Expiration Date Number of Shares or Shares of Stock That Have Not Vested (#) Market Value of Shares or Shares of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Shares or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Shares or Other Rights That Have Not Vested ($) Charles M. Fernandez 75,000 - - $ 3.81 12/16/2031 200,000 (1 ) $ 330,000 - $ - 70,000 - - $ 2.13 7/1/2032 200,000 - - $ 2.45 4/14/2028 345,000 - - 200,000 330,000 - - David Phipps 889 - - 112.5 12/15/2026 - $ - - $ - 444 - - 112.5 5/25/2027 - $ - - $ - 300,000 - - 1.25 12/30/2030 - $ - - $ - 301,333 - - Douglas Ellenoff 450,000 (1 ) 800,000 (1 ) - 5.35 8/23/2026 20,000 (1 ) $ 33,000 - $ - 450,000 800,000 - 40,000 33,000 - - (1) Options granted outside of the Company’s 2018, 2020 and 2021 Equity Awards Plan. 81 Table of Contents Employment Agreements Phipps Employment Agreements Phipps June 2018 Employment Agreement On June 14, 2018, the Company entered into a two-year Employment Agreement (“2018 Phipps Agreement”) with Mr. Phipps, with an automatic one-year extension. Under the terms of the 2018 Phipps Agreement, Mr. Phipps served as the Company’s Chief Executive Officer and President and received an annual base salary equal to the sum of $170,000 and £48,000 paid through our operating subsidiary, GTC. For the years ended December 31, 2019 and 2018, the £48,000 equivalent to USD is $61,293 and $62,219 and the yearly conversion rate is 1.276933 and 1.296229, respectively. The 2018 Phipps Agreement provided for a performance bonus based on exceeding our annual revenue goals and on our ability to attract new investment. The Agreement also provided for medical plan coverage, an auto allowance, paid vacation, and discretionary stock grants and option awards. In the event of termination without cause, termination as a result of a change in control, or resignation with good reason (as defined in the 2018 Phipps Agreement), Mr. Phipps was entitled to a severance equal to twice his base salary, the immediate vesting of all unvested options, and other benefits. As described below, the 2018 Phipps Agreement terminated in accordance with its terms on June 14, 2020, and Mr. Phipps and the Company subsequently entered into a new employment agreement. On March 13, 2020, the Company and David Phipps executed a waiver of the provisions in his employment agreement requiring prior written notice of non-renewal to the other party. As a result, his employment terms with the Company were not automatically extended as set forth in his employment agreement and the agreement terminated as of June 14, 2020. After a series of monthly extensions Mr. Phipps’ employment agreement was replaced with a new employment agreement on March 11, 2021. As described in more detail below, on June 5, 2021, the Company entered into a new three-year employment agreement with Mr. Phipps (the “2021 Phipps Employment Agreement”) that was effective as of June 2, 2021 and that replaced his existing employment agreement. The 2021 Phipps Employment Agreement set Mr. Phipps’ annual base compensation at $350,000. Phipps June 2021 Employment Agreement On June 5, 2021, the Company entered into a new three-year employment agreement with Mr. Phipps, the that was effective as of June 2, 2021, also referred to herein as the 2021 Phipps Employment Agreement. Under the terms of the 2021 Phipps Employment Agreement, Mr. Phipps will serve as the serve as President of the Company and Chief Executive Officer of Global Operations. The term will be automatically extended for additional one-year terms thereafter unless terminated by the Company or Mr. Phipps by written notice. Mr. Phipps’ annual base compensation under the 2021 Phipps Employment Agreement is an aggregate of $350,000.The Company may increase (but not decrease) his compensation during its term. In addition, Mr. Phipps will be entitled to receive an annual cash bonus if the Company meets or exceeds criteria adopted by the Compensation Committee of the Board of Directors. Mr. Phipps is also entitled to participate in any other executive compensation plans adopted by the Board of Directors and is eligible for such grants of awards under stock option or other equity incentive plans as the Compensation Committee of the Company may from time to time determine (the “Share Awards”). Share Awards will be subject to the applicable Plan terms and conditions, provided, however, that Share Awards will be subject to any additional terms and conditions as are provided therein or in any award certificate(s), which shall supersede any conflicting provisions governing Share Awards provided under the equity incentive plan. The Company is required to pay or to reimburse Mr. Phipps for all reasonable out-of-pocket expenses actually incurred or paid by Mr. Phipps in the course of his employment, consistent with the Company’s policy. Mr. Phipps will be entitled to participate in such pension, profit sharing, group insurance, hospitalization, and group health and benefit plans and all other benefits and plans, including perquisites, if any, as the Company provides to its senior employees. The 2021 Phipps Agreement may be terminated based on death or disability of Mr. Phipps, for cause or without good reason, for cause or with good reason, and as a result of the change of control of the Company. The 2021 Phipps Agreement also contains certain provisions that are customary for agreements of this nature, including, without limitation, non-competition and non-solicitation covenants, indemnification provisions, etc. On August 7, 2021, the 2021 Phipps Agreement was amended in order to, among other things, (i) increase Mr. Phipps’ compensation to include a car allowance of $1,000 a month and (ii) clarify Mr. Phipps position to be President of NextPlat Corp and the Chief Executive Officer of Global Operations. Fernandez Employment Agreements Fernandez May 2021 Employment Agreement On May 23, 2021, the Company entered into a three (3) year Employment Agreement (the “May Agreement”) with Mr. Fernandez to serve as Chairman of the Board. Such agreement includes provision for automatic one (1) year extensions. Under the terms of May Agreement, Mr. Fernandez’s employment commenced on May 28, 2021. As compensation for services under the May Agreement, Mr. Fernandez was to receive, in monthly installments during the term, the sum of $12,000 per month. Mr. Fernandez was also be entitled to such cash bonus opportunity and equity compensation arrangements as the Compensation Committee may determine following the effectiveness of this registration statement. The May Agreement also provided for the Company to reimburse Mr. Fernandez for any and all premium payments made by him to obtain and continue in full force and effect throughout the entire period of employment for personal catastrophe and disability insurance coverages. Such insurance was to have premium limits not to exceed one hundred percent (100%) of Mr. Fernandez’s Base Salary per annum. In addition, Mr. Fernandez was entitled to participate in such pension, profit sharing, group insurance, hospitalization, and group health and benefit plans and all other benefits and plans, including perquisites, if any, as the Company provides to its senior executives. Under the May Agreement, the Company was also obligated to reimburse Mr. Fernandez for up to $10,000 per year related to Mr. Fernandez’s business and personal travel and/or that of his immediate family members, as well as up to $10,000 per year for professional fees incurred by Mr. Fernandez, whether in connection with Mr. Fernandez’s association with the Company or otherwise. In connection to the June Offering, which is described above, the Company granted Mr. Fernandez an award of restricted stock with a grant date fair value equal to $3,000,000 determined at the per unit offering price of $5.00 per unit (the “RSA”), which RSA will vest 1/3 at each of the three anniversaries of the grant date. Notwithstanding the vesting schedule, full vesting will occur upon a Change in Control, as that term is defined in the RSA. The Company, at its sole expense, is obligated to register the reoffer and resale by Mr. Fernandez of the securities granted to Employee pursuant to the RSA. 82 Table of Contents Fernandez June 2021 Employment Agreement On June 2, 2021, the Company entered into a new employment agreement (the “June Agreement”) with Charles M. Fernandez, with an initial term of five (5) years effective on May 28, 2021. The June Agreement replaced “the May Agreement”. Under the June Agreement, Mr. Fernandez will serve as the Chairman and Chief Executive Officer of the Company. The June Agreement will be automatically extended for additional one-year terms unless terminated by the Company or Mr. Fernandez by written notice. Mr. Fernandez’s annual base compensation under the June Agreement is $350,000 per year, which was increased to $525,000 per year in April 2023. The Company may increase (but not decrease) his compensation during the June Agreement’s term. In addition, Mr. Fernandez is entitled to receive an annual cash bonus if the Company meets or exceeds criteria adopted by the Compensation Committee of the Board. Mr. Fernandez is also entitled to participate in any other executive compensation plans adopted by the Board and is eligible for such grants of Share Awards. Share Awards will be subject to the applicable Plan terms and conditions, provided, however, that Share Awards will be subject to any additional terms and conditions as are provided therein or in any award certificate(s), which will supersede any conflicting provisions governing Share Awards provided under the equity incentive plan. The Company is required to pay or to reimburse Mr. Fernandez for all reasonable out-of-pocket expenses actually incurred or paid by Mr. Fernandez in the course of his employment, consistent with the Company’s policy. Mr. Fernandez will also be entitled to participate in such pension, profit sharing, group insurance, hospitalization, and group health and benefit plans and all other benefits and plans, including perquisites, if any, as the Company provides to its senior employees. The June Agreement may be terminated based on death or disability of Mr. Fernandez, for cause or without good reason, for cause or with good reason, as a result of the change of control of the Company and at the option of Mr. Fernandez with or without cause. The June Agreement also contains certain provisions that are customary for agreements of this nature, including, without limitation, non-competition and non-solicitation covenants, indemnification provisions, etc. The Company will also reimburse Mr. Fernandez for any and all premium payments made by him to obtain and continue personal catastrophe and disability insurance coverages for himself, which policy will have policy limits not to exceed one hundred percent (100%) of his base salary per annum at any given time. In addition, the Company will pay for any and all travel-related expenses incurred by Mr. Fernandez and/or his immediate family members, not to exceed $10,000.00 per fiscal year, regardless of whether or not such expenses are incurred by Mr. Fernandez in connection with services or duties to be performed by him as an employee of the Company. The Company will also pay for any and all fees and costs incurred by Mr. Fernandez in connection with professional services provided to him, not to exceed $10,000 per year, including, without limitation, services provided to the Company by attorneys, accountants, financial planners and the like, regardless of whether or not such services are provided to Mr. Fernandez in connection with his employment with the Company. In addition, the June Agreement (which repeats, but not duplicates, a grant of restricted stock made under the May Agreement), Mr. Fernandez received an award of restricted stock with a grant date fair value equal to $3,000,000 determined at the per unit offering price in the June Offering ($5 per Unit) (the “RSA”), which RSA will vest 1/3 at each of the three anniversaries of the grant date. The Grant Date for the RSA is May 28, 2021, as determined pursuant to the May Agreement. Notwithstanding the vesting schedule, full vesting will occur upon a Change in Control, as that term is defined in the Restricted Stock Agreement pursuant to which the RSA was made (the “May Restricted Stock Agreement”). The Company at its sole expense is obligated to register for reoffer and resale by Mr. Fernandez, the securities granted to him pursuant to the May Restricted Stock Agreement. If Mr. Fernandez’s employment is terminated for any reason at any time by the Company prior to the full vesting of the RSA without “Cause” (as that term is defined in the June Agreement), the RSA will vest and Mr. Fernandez will receive all right, title and interest in the balance of the securities granted to him in the RSA. During the term of the June Agreement and so long as Mr. Fernandez is employed by the Company, he may nominate two directors to the Company’s Board of Directors. The appointment of these directors to the Board is subject to approval by the Board of Directors. On August 7, 2021, the June Agreement was amended in order to, among other things, increase Mr. Fernandez’s compensation by (i) providing for medical plan coverage for Mr. Fernandez and his family at the expense of the Company, and (ii) providing for an auto allowance $1,000 per month. Ellenoff Employment Agreement On August 24, 2021, Douglas S. Ellenoff was appointed to the positions of Chief Business Development Strategist of the “Company” and Vice Chairman of the Board of Directors of the Company. The appointment was made on the approval and recommendation of the Nominating Committee of the Board. Mr. Ellenoff was not appointed to any committees of the Board. In connection with Mr. Ellenoff’s appointment to the position of Chief Business Development Strategist of the Company, Mr. Ellenoff and the Company entered into a three-year Employment Agreement, dated August 24, 2021, which is also referred to herein as the “Ellenoff Agreement”., Under the Ellenoff Agreement, which sets forth the terms of his employment, including with regard to compensation. Mr. Ellenoff will be nominated and renominated to serve on the Board during the term of the agreement. Under the terms of the Ellenoff Employment Agreement, Mr. Ellenoff will receive, in lieu of cash compensation: (i) a restricted stock award of 100,000 shares of Common Stock of the Company, 40,000 of which will be issued within 5 business days of the execution of the Ellenoff Employment Agreement and vest immediately, and the remaining 60,000 of which will be issued and vest at the rate of 20,000 shares at the end of each of the next three annual anniversaries of his employment, provided that Mr. Ellenoff serves on the Board at any time during such year; and (ii) options to purchase a total of 1,500,000 shares of the Corporation’s Common Stock, 300,000 of which will issued within 5 business days of the execution of the Ellenoff Employment Agreement and vest immediately, 150,000 of which will vest on each of the next three annual anniversaries of the commencement of his employment, and the remaining 750,000 of which will vest at the rate of 250,000 per year on each of the first three anniversaries of the commencement of his employment if during each such year Mr. Ellenoff introduces the Company to twelve (12) or more potential Business Transactions (as defined in the Ellenoff Employment Agreement and which transactions need not be consummated); provided that the Company’s Chief Executive Officer may, in his sole discretion, waive the vesting requirement in any given year. Such options have an exercise price of $5.35 per share and will terminate 5 years after they vest. These equity awards to Mr. Ellenoff were material to induce Mr. Ellenoff to enter into the Ellenoff Employment Agreement and were issued outside of a shareholder approved stock or option plan pursuant to the Nasdaq “inducement grant” exception (Nasdaq Listing Rule 5635(c)(4)). 83 Table of Contents Potential Payments Upon Termination or Change-in-Control In the event of a termination of Mr. Fernandez’s or Mr. Phipps’ (the “Subject Employees”) employment as a result of his death or Total Disability (as defined in the respective employment agreement) the Subject Employee or his estate or beneficiaries, as applicable, will be entitled to the following severance benefits: (i) continued provision for a period of twelve (12) months following the Subject Employee’s death or Total Disability of benefits under the Company’s benefit plans extended by the Company to its senior employees; and (ii) payment on a pro-rated basis of any bonus or other payments earned prior to the date of termination in connection with any bonus plan to which the Subject Employee was a participant as of the date of death or Total Disability. In the event of a termination of a Subject Employee’s employment due to the expiration of the term of the respective employment agreement, and where the Company offered to renew the term of employment and the Subject Employee chooses not to continue in the employ of the Company, the Subject Employee will not be entitled to any severance benefits. Upon termination of employment by the Subject Employee for “good reason” (as defined in the respective employment agreement) or if the Company tenders a non-renewal notice to the Subject Employee without “Cause” (as defined in the respective employment agreement), then the Subject Employee will be entitled to the following severance benefits: (i) a cash payment, based on the current scale of the Subject Employee’s base salary, equal to six months of base salary; (ii) continued provision for a period of twelve (12) months after the date of termination of the benefits under the Company’s benefit plans extended by the Company to its senior employees; (iii) payment on a pro-rated basis of any bonus or other payments earned in connection with any bonus plan to which the Subject Employee was a participant as of the date of the Subject Employee’s termination of employment; and (iv) any options or restricted stock will be immediately vested upon termination of Subject Employee’s employment. Upon termination of the Subject Employee’s employment at the Subject Employee’s option (without good reason) or by the Company for “Cause,” then the Subject Employee will be entitled to the following benefits: (i) continued provision, for a period of one (1) month after the date of the Subject Employee’s termination of employment, of benefits under the Company’s benefit plans extended to the Employee at the time of termination and (ii) any conversion rights available under the Company’s benefit plans and as otherwise provided by law, including the Comprehensive Omnibus Budget Reconciliation Act. In addition, notwithstanding the vesting schedule set forth in May Restricted Stock Agreement, full vesting of Mr. Fernandez’s RSA will occur upon a Change in Control, as that term is defined in the May Restricted Stock Agreement pursuant to which the RSA was made. If Mr. Fernandez’s employment is terminated for any reason at any time by the Company prior to the full vesting of the RSA without “Cause” (as that term is defined in the June Agreement), the RSA will vest and Mr. Fernandez will receive all right, title and interest in the balance of the securities granted to him in the RSA. In the event of a termination of Mr. Ellenoff’s employment as a result of his death, his Total Disability (as defined in the Ellenoff Employment Agreement), the expiration of the initial term of the Ellenoff Employment Agreement, Mr. Ellenoff’s resignation for any reason or no reason (upon thirty (30) days prior written notice), or for “Cause” (as defined in the Ellenoff Employment Agreement); then, in addition to the reimbursement of documented, unreimbursed expenses incurred prior to such date, Mr. Ellenoff or his estate or beneficiaries, as applicable, will be entitled to receive any RSAs and options earned and/or vested through the such date, but all other RSAs and options shall immediately terminate. Upon termination of Mr. Ellenoff’s employment (as defined in the Ellenoff Employment Agreement), in addition to the reimbursement of documented, unreimbursed expenses incurred prior to such date, Mr. Ellenoff will be entitled to receive any RSAs and options provided for under the Ellenoff Employment Agreement; any RSAs and Options that previously had not been vested will immediately vest, and any RSAs or Options contemplated by the Ellenoff Employment Agreement that had not yet been issued to Mr. Ellenoff will be promptly issued by the Company. Director Compensation The 2023 director compensation packages consists of a cash retainer of $48,000 for each non-employee Director, plus an equity award of options to purchase 20,000 shares of common stock to each non-employee Director (“2023 Equity Awards”). The 2023 Equity Awards were fully vested on the grant date. The table below sets forth the compensation earned by our non-employee directors for service on our Board of Directors during the year ended December 31, 2023. Compensation paid to Charles M. Fernandez, our Executive Chairman, Chief Executive Officer, and Director, David Phipps, our President and Chief Executive Officer of Global Operations, and Director, and Douglas S. Ellenoff, our Vice Chairman and Chief Business Development Strategist for their service on the Board of Directors is set forth in Summary Compensation Table for named executive officers. Director Fees earned or paid in cash Stock awards Option awards Nonequity incentive plan compensation Nonqualified deferred compensation earnings All Other Compensation Total John E. Miller $ 48,000 $ - $ 48,000 $ - $ - $ - $ 96,000 Louis Cusimano $ 48,000 $ - $ 48,000 $ - $ - $ - $ 96,000 Hector Delgado $ 48,000 $ - $ 48,000 $ - $ - $ - $ 96,000 Kendall W. Carpenter $ 48,000 $ - $ 48,000 $ - $ - $ - $ 96,000 Rodney Barreto $ 48,000 $ 235,000 $ - $ - $ - $ - $ 283,000 Maria Cristina Fernandez $ 38,500 $ - $ 61,500 $ - $ - $ 5,000 $ 105,000 84 Table of Contents Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth information, as of March 26, 2024, regarding beneficial ownership of our common stock by: ● each of our directors; ● each of our named executive officers; ● all directors and executive officers as a group; and ● each person, or group of affiliated persons, known by us to beneficially own more than five percent of our shares of common stock. Beneficial ownership is determined according to the rules of the SEC, and generally means that person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power of that security and includes options that are currently exercisable or exercisable within 60 days. Each director or officer, as the case may be, has furnished us with information with respect to beneficial ownership. Except as otherwise indicated, we believe that the beneficial owners of common stock listed below, based on the information each of them has given to us, have sole investment and voting power with respect to their shares, except where community property laws may apply. Number of Percent of Name and Address of Beneficial Owner (1) Shares (2) Class(2) Directors and Executive Officers (including Named Executive Officers) Charles M. Fernandez†+ 5,750,047 (3) 27.7% Douglas S. Ellenoff†+ 705,000 (4) 3.6% David Phipps†+ 751,621 (5) 3.9% Kendall Carpenter† 40,000 * Louis Cusimano† 55,433 * Hector Delgado† 54,710 (6) * John Miller† 43,000 * Rodney Barreto† 2,686,799 (7) 13.6% Maria Cristina Fernandez† 40,000 (8) * Directors and current Executive Officers as a Group 10,126,610 44.2% 5% Stockholders (9) Frost Gamma Investment Trust (10) 3,428,571 (11) 18.3% Robert D. Keyser, Jr. (12) 1,534,795 (13) 7.90% * Indicates beneficial ownership of less than 1% of the outstanding common stock † Director + Executive Officer * Indicates beneficial ownership of less than 1% of the outstanding common stock † Director + Executive Officer 85 Table of Contents (1) Unless otherwise indicated in the footnotes, the address of the beneficial owners is c/o NextPlat Corp, 3520 Mary St., Suite 410, Coconut Grove, Florida 33133. (2) A person is deemed to be the beneficial owner of securities that can be acquired by him or her within 60 days from March 26, 2024 upon the exercise of options, warrants or other convertible securities. Percentage is based on 18,724,596 shares of common stock outstanding as of March 26, 2024. (3) Represents (i) 3,677,667 shares of common stock, including 2,103,214 shares of common stock held by eAperion Partners, LLC, (ii) options to purchase 345,000 shares of common stock that are currently exercisable, (iii) warrants to purchase 1,685,714 shares of common stock that are currently exercisable, including 1,085,714 warrants owned by eAperion Partners, LLC, (iv) 25,000 shares of common stock owned by Mr. Fernandez's spouse, which may be deemed to be beneficially owned by Mr. Fernandez, and (v) options to purchase up to 16,666 shares of common stock owned by Mr. Fernandez's spouse, which may be deemed to be beneficially owned by Mr. Fernandez. Does not include options to purchase 8,333 shares of common stock granted to Mr. Fernandez's spouse on April 7, 2023 that vest on April 7, 2025. Mr. Fernandez is the owner and manager of eApeiron Partners, LLC. (4) Represents (i) 105,000 shares of common stock and (ii) options to purchase 600,000 shares of common stock that are currently exercisable. Does not include 20,000 shares of restricted stock awarded on August 24, 2021, that vest on August 24, 2024. (5) Represents (i) 421,788 shares of common stock, (ii) options to purchase 301,333 shares of common stock that are currently exercisable, and (iii) warrants to purchase 28,500 shares of common stock that are currently exercisable. (6) Represents (i) 24,599 shares of common stock, and (ii) options to purchase 30,111 shares of common stock that are currently exercisable. (7) Represents (i) 1,601,085 shares of common stock and (ii) warrants to purchase 1,085,714 shares of common stock that are currently exercisable. Includes shares of common stock and warrants held indirectly through RLB Market Investments, LLC. Mr. Barreto is owner and manager of RLB Market Investments, LLC. (8) Includes options to purchase 40,000 shares of common stock that are immediately exercisable. (9) Based on the contents of statements filed with the SEC by our stockholders, we do not believe that any stockholders other than Messrs. Fernandez, Barreto, Frost, and Keyser are beneficial owners of more than five percent of our common stock. (10) The address of the beneficial owners is c/o Gamma Investment Trust, 4400 Biscayne Blvd, Suite 1500, Miami, Florida 33137. (11) Represents 3,428,571 shares of common stock. (12) The address of the beneficial owners is 1515 N. Federal Highway, #300, Boca Raton, Florida 33432. (13) Represents (i) 202,947 shares of common stock held directly by Robert D. Keyser, Jr., (ii) 528,344 shares of common stock held by Sixth Borough Capital Fund, LP, (iii) 10,160 shares of common stock held by Robert Dawson Keyser III, (iv) 20,000 shares of common stock held by Auxol Capital, LLC, and (v) warrants to purchase 773,344 shares of common stock that are currently exercisable. Securities Authorized for Issuance under Equity Compensation Plans Equity Compensation Plan Information The following table summarizes information, as of December 31, 2023, relating to equity compensation plans of the Company under which the Company’s common stock is authorized for issuance. Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders: Equity compensation plans 2020 Incentive Plan 523,000 $ 0.28 600 Equity compensation plans 2021 Incentive Plan 295,000 0.35 328,529 Equity compensation plans not approved by security holders: 2018 Incentive Plan - - 1,333 Equity compensation issued pursuant to individual compensation arrangements 1,447,333 2.98 - Total 2,265,333 $ 3.61 330,462 86 Table of Contents Item 13. Certain Relationships and Related Transactions, and Director Independence. SEC rules require us to disclose any transaction or currently proposed transaction in which the Company is a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120,000 or one percent (1%) of the average of the Company’s total assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s common stock, or an immediate family member of any of those persons. Employees Related to Mr. Phipps. For the year ended December 31, 2023 and 2022, the Company employed two individuals related to Mr. Phipps who earned gross wages totaling approximately $78,000 and $56,000, respectively. Employee related to Mr. Fernandez. On July 12, 2022, the Company hired Lauren Sturges Fernandez, the spouse of Mr. Fernandez, as Manager of Digital Assets. Mrs. Fernandez is an at-will employee with an annual salary of $95,000. On September 22, 2022, Mrs. Fernandez’s title was changed to Chief of Staff and Special Assistant to the Chairman of the Board, her salary remained the same. Previously Mrs. Fernandez was a consultant and earned compensation for her services of $10,995, for the year ended December 31, 2022. In April 2023, Mrs. Fernandez’s annual salary increased to $125,000, which was approved by the Board of Directors. On April 7, 2023, Ms. Sturges Fernandez was awarded (a) 25,000 fully vested shares of restricted common stock of the Company under the 2021 Plan, and (b) options to purchase 25,000 shares of common stock of the Company at an exercise price of $1.98 per share. The options have a five-year term. One third of the options were fully vested on the award date and the remaining options vest on the first and second anniversary of the award date. Progressive Care. Following the consummation of the Company’s investment in Progressive Care Inc. on September 2, 2022, our Chairman and Chief Executive Officer, Charles M. Fernandez, and our board member, Rodney Barreto, were appointed to Progressive Care’s Board of Directors, with Mr. Fernandez appointed to serve as Chairman of Progressive Care’s Board of Directors and Mr. Barreto appointed to serve as a Vice Chairman of Progressive Care’s Board of Directors. On November 11, 2022, the Progressive Care board of directors elected Mr. Fernandez as the Chief Executive Officer of Progressive Care. In addition, on August 30, 2022, NextPlat, Messrs. Fernandez and Barreto and certain other purchasers (the “NextPlat Investors”) purchased from Iliad Research and Trading, L.P. (“Iliad”) a Secured Convertible Promissory Note, dated March 6, 2019, made by Progressive Care to Iliad (the “Note”). The accrued and unpaid principal and interest under the note at the time of the purchase was approximately $2.8 million. The aggregate purchase price paid to Iliad for the Note was $2.3 Million of which NextPlat contributed $1 million and Messrs. Fernandez and Barreto contributed $400,000 each (the “Note Purchase”). Upon completion of the Note Purchase, NextPlat, Messrs. Fernandez and Barreto and the other purchasers of the Note entered into a Debt Modification Agreement with Progressive Care pursuant to which the Note was amended and restated with modified terms, including a modified conversion price of $4.00 per share of common stock (after giving effect to the Progressive Care reverse stock split described below), and a mandatory conversion upon the later to occur of (a) the completion of the Progressive Care’s reverse stock split, and (b) the listing of Progressive Care’s common stock on a national exchange, including the Nasdaq Capital Market, the Nasdaq Global Market, or the New York Stock Exchange (the “A&R Note”). In consideration of the concessions in the Debt Modification Agreement, Progressive Care issued 105,000 shares of its common stock to the NextPlat Investors, of which NextPlat, Charles M. Fernandez and Rodney Barreto, received 45,653, 18,261, and 18,261 shares, respectively, in each case after giving effect to a 1-for-200 reverse stock split enacted by Progressive Care on December 30, 2022. On May 5, 2023, NextPlat entered into a Securities Purchase Agreement (the “SPA”) with Progressive Care, pursuant to which NextPlat purchased 455,000 newly issued units of securities from Progressive Care (the “Units”) at a price per Unit of $2.20 for an aggregate purchase price of $1 million (the “Unit Purchase”). Each Unit consisted of one share of common stock, par value $0.0001 per share, of Progressive Care and one warrant to purchase a share of common stock (the “PIPE Warrants”). The PIPE Warrants have a three-year term and are immediately exercisable. Each PIPE Warrant is exercisable at $2.20 per share of common stock. On May 9, 2023, the Companies closed the transactions contemplated in the SPA. Progressive Care received cash proceeds of $880,000, net of placement agent commission of $70,000 and legal fees of $50,000. Simultaneous with the closing of the Unit Purchase on May 9, 2023, Progressive Care entered into a Debt Conversion Agreement (the “DCA”) with the NextPlat Investors relating to the A&R Note. Pursuant to the DCA, the NextPlat Investors agreed to convert the total approximately $2.9 million of outstanding principal and accrued and unpaid interest under the A&R Note to Proogressive Care common stock at a conversion price of $2.20 per share (the “Debt Conversion”). Of the total 1,312,379 shares of Progressive Care common stock issued pursuant to the Debt Conversion, NextPlat received 570,599 shares, Charles M. Fernandez received 228,240 shares, and Rodney Barreto received 228,240 shares. In addition, each of the NextPlat Investors also received a warrant to purchase one share of Progressive Care common stock for each share of Progressive Care common stock they received upon conversion of the A&R Note (the “Conversion Warrants”). The Conversion Warrants have a three-year term and were immediately exercisable. Each Conversion Warrant is exercisable at $2.20 per share of Common Stock. In addition, Progressive Care issued 330,000 warrants to certain existing Progressive Care investors to induce them to approve the Unit Purchase (the “Inducement Warrants”). Charles M. Fernandez and Rodney Barreto received Inducement Warrants to purchase 190,000 and 30,000 shares of Common Stock, respectively. The Inducement Warrants have a three-year term and were immediately exercisable. Each Inducement Warrant is exercisable at $2.20 per share of Progressive Care common stock. On July 1, 2023, NextPlat, along with Messrs. Fernandez and Barreto, exercised certain common stock purchase warrants issued by Progressive Care (the “RXMD Warrants”) and were issued shares of Progressive Care common stock. NextPlat exercised RXMD Warrants on a cashless basis and was issued 402,269 shares of Progressive Care common stock. NextPlat also exercised RXMD Warrants on a cash basis and paid consideration in the amount of $506,000 and was issued 230,000 shares of Progressive Care common stock. Mr. Fernandez exercised RXMD Warrants on a cashless basis and was issued 211,470 shares of Progressive Care common stock. Mr. Barreto exercised RXMD Warrants on a cashless basis and was issued 130,571 shares of Progressive Care common stock. At the time of exercise, all of the above RXMD Warrants were in-the-money. After the exercise of the RXMD Warrants, NextPlat and Messrs. Fernandez and Barreto collectively owned approximately 53% of Progressive Care’s voting common stock. Also, on July 1, 2023, NextPlat entered into a voting agreement with Messrs. Fernandez and Barreto whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs. Fernandez and Barreto agreed to vote all of their shares of Progressive Care common stock (including any new shares of Progressive Care common stock acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Progressive Care common stock) that they own, directly or indirectly, in the same manner that NextPlat votes its shares of Progressive Care common stock and equivalents. The voting agreement is irrevocable and perpetual in term. 87 Table of Contents January 2022 Offering. The Company received gross proceeds of approximately $7.2 million from the sale Common Stock in an offering that closed on January 5, 2022. Approximately 73% of funds raised in the offering were secured from existing shareholders, and from members of the Company’s senior management and Board of Directors. The following table represents the related party investment in the January Offering: Investor Position held at NextPlat Shares of Common Stock Purchased Aggregate Purchase Price Charles M. Fernandez Executive Chairman and Chief Executive Officer 679,013 $ 2,200,002 David Phipps Director and President of Orbsat. Chief Executive Officer of Global Operations 46,297 $ 150,002 Douglas Ellenoff Shares are deemed to be indirectly beneficially owned through Sabrina Allan, Mr. Ellenoff’s wife. Mr. Ellenoff has the power to vote and dispose of the shares. Vice Chairman and Chief Business Development Strategist 46,297 $ 150,002 Louis Cusimano Director 15,433 $ 50,003 Paul R. Thomson Senior Vice President – Mergers, Acquisitions and Special Projects 15,433 $ 50,003 On January 20, 2022 , the Company appointed Rodney Barreto, to its Board. Mr. Barreto was a participant of the January offering and purchased 370,701 shares of common stock for $3.24 per share or approximately $1.2 million. Mr. Barreto’s investment represented 17% of the total. December 2022 Offering. On December 14, 2022, the Company closed a private placement for the sale of 4,575,429 units (each, a “Unit”), each Unit consisting of (i) one share of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), and (ii) one warrant to purchase one share of Common Stock (each, a “Warrant”). The offering price of the Units was $1.75 per Unit. The Warrants included in the Units are exercisable at a price of $1.75 per share and expire three years from the date of issuance. Related party investment represented 48%, of the approximately $8.0 million of the funds raised. The following table represents the related party investment in the December Offering: Investor Position held at NextPlat Shares of Common Stock Purchased Warrants to purchase Common Stock Aggregate Purchase Price eAperion Partners LLC, principal Charles M. Fernandez Executive Chairman and Chief Executive Officer 1,085,714 1,085,714 $ 1,900,000 David Phipps Director and President of NextPlat. Chief Executive Officer of Global Operations 28,500 28,500 $ 49,875 RLB Market Investments LLC, principal, Rodney Barreto Director 1,085,714 1,085,714 $ 1,900,000 Next Borough Capital Management, LLC. On July 7, 2023, the Company entered into an unsecured promissory note agreement with Next Borough Capital Management, LLC (“the Borrower”), whereby the Company loaned $250,000 to the Borrower. The note bears interest at an annual rate of 7%. The outstanding principal balance of the note plus all accrued unpaid interest is due and payable on July 7, 2024, the Maturity Date. Each of the Company, Charles M. Fernandez, Robert D. Keyser, Jr., eAperion Partners, LLC and a revocable trust of Rodney Barreto are members of the Borrower. Policies and Procedures for Related Party Transactions The Audit Committee was responsible for reviewing, approving and overseeing any transaction between the Company and a related person. The Audit Committee’s responsibility includes, but is not limited to, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which we were or will be a participant and (a) the amount involved exceeds the lesser of $120,000 or one percent (1%) of the average of the Company’s total assets as of the end of last two completed fiscal years, and (b) a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s common stock, or an immediate family member of any of those persons. 88 Table of Contents Director Independence The rules of the Nasdaq Stock Market, or the Nasdaq Rules, require a majority of a listed company’s board of directors to be composed of independent directors. In addition, the Nasdaq Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance committees be independent. Under the Nasdaq Rules, a director will only qualify as an independent director if, in the opinion of our Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Nasdaq Rules also require that audit committee members satisfy independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. In considering the independence of compensation committee members, the Nasdaq Rules require that our board of directors must consider additional factors relevant to the duties of a compensation committee member, including the source of any compensation we pay to the director and any affiliations with our company. Our Board undertook a review of the composition of our Board and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our Board has determined that each of our directors, with the exception of David Phipps, Douglas Ellenoff and Charles M. Fernandez, are independent as defined under the Nasdaq Rules. Item 14. Principal Accountant Fees and Services. Aggregate fees for professional services rendered by RBSM LLP for their services for the fiscal years ended December 31, 2023 and 2022, respectively, were as follows: RBSM, LLP 2023 2022 Audit fees (1) $ 200,600 $ 162,500 Audit-related fees (2) 7,500 10,000 Tax fees - 11,500 Other fees (3) 35,000 50,000 Total fees $ 243,100 $ 234,000 Audit Fees Audit fees represent the aggregate fees billed for professional services rendered by our independent accounting firm for the audit of our annual financial statements, review of financial statements included in our quarterly reports, review of registration statements or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years. Audit-Related Fees Audit-related fees represent the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under Audit Fees. Tax Fees Tax fees represent the aggregate fees billed for professional services rendered by our principal accountants for tax compliance, tax advice, and tax planning for such years. All Other Fees All other fees represent the aggregate fees billed for products and services other than the services reported in the other categories. Audit Committee Pre-Approval Policies and Procedures The Audit Committee annually reviews audit and non-audit services performed by the independent auditors. All audit and non-audit services are pre-approved by the Audit Committee, which considers, among other things, the possible effect of the performance of such services on the auditors’ independence. PART IV Item 15. Exhibits, Financial Statement Schedules. (a) Documents filed as part of this report. (1) Financial Statements. See Index to Consolidated Financial Statements, which appears on page F-1 hereof. The financial statements listed in the accompanying Index to Consolidated Financial Statements are filed herewith in response to this Item. (2) Financial Statements Schedules. None. 89 Table of Contents (3) Exhibits Exhibit No. Description 1.1 Placement Agency Agreement dated December 9, 2022, by and between the Company and Dawson James Securities, Inc. (incorporated by reference to Exhibit 1.1 to the Company’ s Current Report on Form 8-K filed with the Commission on December 13, 2022). 3.1 Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2014). 3.2 Certificate of Amendment to Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.3 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2014). 3.3 Certificate of Amendment to Amended and Restated Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 8, 2016). 3.4 Certificate of Change to the Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.7 to the Company’ s Current Report on Form 8-K filed with the SEC on May 28, 2021). 3.5 Certificate of Amendment of the Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’ s Current Report on Form 8-K filed with the SEC on January 20, 2022). 3.6 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’ s Current Report on Form 8-K filed with the SEC on January 20, 2022). 4.1* Description of NextPlat Corp’ s Securities Registered Under Section 12 of the Exchange Act. (Incorporated by reference to Exhibit 4.1 to the Company ’ s Annual Report on Form 10-K filed with the SEC on March 31, 2022). 4.2 Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Company’ s Registration Statement on Form S-1/A filed with the SEC on April 7, 2021). 4.3 Form of Warrant Agent Agreement (incorporated by reference to Exhibit 4.2 to the Company’ s Registration Statement on Form S-1/A filed with the SEC on April 7, 2021). 4.4 Form of Underwriter’ s Warrant (incorporated by reference to Exhibit 4.3 to the Company ’ s Registration Statement on Form S-1/A filed with the SEC on April 7, 2021). 4.5 Form of Warrant Agreement issued in offering (incorporated by reference to Exhibit 4.1 to the Company’ s Current Report on Form 8-K filed with the Commission on December 13, 2022) 4.6 Form of Placement Agent Warrant Agreement issued in offering (incorporated by reference to Exhibit 4.2 to the Company’ s Current Report on Form 8-K filed with the Commission on December 13, 2022) 10.1 Form 7% Convertible Promissory Note (Incorporated by reference from the Current Report on Form 8-K filed with the SEC on March 11, 2021). 10.2 Form Note Purchase Agreement (Incorporated by reference from the Current Report on Form 8-K filed with the SEC on March 11, 2021). 10.3 + David Phipps Employment Agreement (Incorporated by reference from the Current Report on Form 8-K filed with the SEC on March 11, 2021). 10.4 + Thomas Seifert Employment Agreement (Incorporated by reference from the Current Report on Form 8-K filed with the SEC on March 11, 2021). 10.5 + 2020 Equity Incentive Plan (Incorporated by reference from the Current Report on Form 8-K filed with the SEC on December 31, 2021). 10.6 Form Note Purchase Agreement (Incorporated by reference from the Current Report on Form 8-K filed with the SEC on December 4, 2020). 10.7 Form 6% Convertible Promissory Note (Incorporated by reference from the Current Report on Form 8-K filed with the SEC on December 4, 2020). 10.8 Debenture by and among Global Telesat Communications LTD and HSBC UK BANK PLC, dated July 16, 2020 (Incorporated by reference from the Company’ s Current Report on Form 8-K filed on July 21, 2020). 10.9 Coronavirus Business Interruption Loan Agreement by and among Global Telesat Communications LTD and HSBC UK BANK PLC, dated July 16, 2020 (Incorporated by reference from the Company’ s Current Report on Form 8-K filed on July 21, 2020). 10.10 Note Purchase Agreement by and among the Company and the lenders set forth on the lender schedule to the Note Purchase Agreement dated August 21, 2020 (incorporated by reference from the Current Report on Form 8-K filed with the SEC on August 27, 2020). 90 Table of Contents Exhibit No. Description 10.11 Form of Option Agreement (Incorporated by reference to Form 10-K, filed with the Securities and Exchange Commission on March 29, 2019) 10.12 Convertible Promissory Note by and between Orbital Tracking Corp. and Power Up Ltd., dated January 14, 2019. (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 17, 2019). 10.13 Form of Share Note Exchange Agreement by and between Orbital Tracking Corp and certain holders of the Company’ s preferred stock. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2019). 10.14 Form of 6% Promissory Note dated April 30, 2019, by and between Orbital Tracking Corp and certain holders of the Company’ s preferred stock. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2019). 10.15 Note Purchase Agreement by and among the Company and the lenders set forth on the lender schedule to the Note Purchase Agreement dated May 13, 2019. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 15, 2019). 10.16 Amendment to Note Purchase Agreement by and among the Company and the lenders set forth on the lender schedule to the Note Purchase Agreement dated May 13, 2019. (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 15, 2019). 10.17 Form 7% Convertible Promissory Note (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on March 11, 2021). 10.18 Form Note Purchase Agreement (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K filed with the SEC on March 11, 2021). 10.19 + David Phipps Employment Agreement (incorporated by reference to Exhibit 10.3 to the Company’ s Current Report on Form 8-K filed with the SEC on March 11, 2021). 10.20 + Thomas Seifert Employment Agreement (incorporated by reference to Exhibit 10.4 to the Company’ s Current Report on Form 8-K filed with the SEC on March 11, 2021). 10.21 + Form Fernandez Restricted Stock Agreement (incorporated by reference to Exhibit 10.19 to Amendment No.4 to the Company’ s registration statement on Form S-1 filed with the SEC on May 25, 2021, File No. 333-253027). 10.22 + Fernandez Employment Agreement, dated May 23, 2021 (incorporated by reference to Exhibit 10.20 to Amendment No.4 to the Company’ s Registration Statement on Form S-1 filed with the SEC on May 25, 2021, File No. 333-253027). 10.23 + Fernandez Employment Agreement, dated June 2, 2021 (incorporated by reference to Exhibit 10.3 to the Company’ s Quarterly Report filed with the SEC on August 17, 2021). 10.24 + Form of Director Offer Letter (incorporated by reference to Exhibit 10.17 to the Company’ s Registration Statement on Form S-1/A filed with the SEC on April 7, 2021). 10.25 Form of Maxim Lockup Agreement (incorporated by reference to Exhibit A to Underwriting Agreement filed as Exhibit 1.1 to the Company’ s Current Report on Form 8-K filed with the SEC on May 28, 2021). 10.26 + Hector Delgado Independent Director Agreement (incorporated by reference to Exhibit 10.21 to the Company’ s Current Report on Form 8-K filed with the SEC on June 7, 2021). 10.27 + Louis Cusimano Independent Director Agreement (incorporated by reference to Exhibit 10.22 to the Company’ s Current Report on Form 8-K filed with the SEC on June 7, 2021). 10.28 + John E. Miller Independent Director Agreement (incorporated by reference to Exhibit 10.23 to the Company’ s Current Report on Form 8-K filed with the SEC on June 7, 2021). 10.29 + Kendall W. Carpenter Independent Director Agreement (incorporated by reference to Exhibit 10.24 to the Company’ s Current Report on Form 8-K filed with the SEC on June 7, 2021). 91 Table of Contents Exhibit No. Description 10.30 + David Phipps Employment Agreement (incorporated by reference to Exhibit 10.25 to the Company’ s Current Report on Form 8-K filed with the SEC on June 7, 2021). 10.31 + Thomas Seifert Employment Agreement (incorporated by reference to Exhibit 10.26 to the Company’ s Current Report on Form 8-K filed with the SEC on June 7, 2021). 10.32 + Sarwar Uddin Employment Agreement (incorporated by reference to Exhibit 10.27 to the Company’ s Current Report on Form 8-K filed with the SEC on June 23, 2021). 10.33 + Theresa Carlise Employment Agreement (incorporated by reference to Exhibit 10.28 to the Company’ s Current Report on Form 8-K filed with the SEC on June 23, 2021). 10.34 Alibaba.com Supplemental Services Agreement (incorporated by reference to Exhibit 10.29 to the Company’ s Current Report on Form 8-K filed with the SEC on July 13, 2021). 10.35 Alibaba.com Transaction Services Agreement (incorporated by reference to Exhibit 10.30 to the Company’ s Current Report on Form 8-K filed with the SEC on July 13, 2021). 10.36 Alibaba.com Terms of Use (incorporated by reference to Exhibit 10.31 to the Company’ s Current Report on Form 8-K filed with the SEC on July 13, 2021). 10.37 + Amendment No. 1 Employment Agreement, dated August 7, 2021, by and between Orbsat Corp and Charles M. Fernandez (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on August 12, 2021). 10.38 + Amendment No. 1 Employment Agreement, dated August 7, 2021, by and between Orbsat Corp and David Phipps (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K filed with the SEC on August 12, 2021). 10.39 + Amendment No. 1 Employment Agreement, dated August 7, 2021, by and between Orbsat Corp and Sarwar Uddin (incorporated by reference to Exhibit 10.3 to the Company’ s Current Report on Form 8-K filed with the SEC on August 12, 2021). 10.40 + Amendment No. 1 Employment Agreement, dated August 7, 2021, by and between Orbsat Corp and Theresa Carlise (incorporated by reference to Exhibit 10.4 to the Company’ s Current Report on Form 8-K filed with the SEC on August 12, 2021). 10.41 + Employment Agreement, dated August 24, 2021, by and between Orbsat Corp and Douglas S. Ellenoff (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K/A filed with the SEC on January 27, 2022). 10.42 + Employment Agreement, dated August 24, 2021, by and between Orbsat Corp and Paul R. Thomson (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K filed with the SEC on August 30, 2021). 10.43 + Stock Option Agreement, dated August 24, 2021, by and between Orbsat Corp and Douglas Ellenoff (incorporated by reference to Exhibit 10.10 to the Company’ s Quarterly Report filed with the SEC on November 15, 2021). 92 Table of Contents Exhibit No. Description 10.44 + Restricted Stock Award Agreement, dated August 24, 2021, by and between Orbsat Corp and Douglas Ellenoff (incorporated by reference to Exhibit 10.11 to the Company’ s Quarterly Report filed with the SEC on November 15, 2021). 10.45 + Stock Option Agreement, dated August 24, 2021, by and between Orbsat Corp and Paul R. Thomson (incorporated by reference to Exhibit 10.12 to the Company’ s Quarterly Report filed with the SEC on November 15, 2021). 10.46 + Restricted Stock Award Agreement, dated August 24, 2021, by and between Orbsat Corp and Paul R. Thomson (incorporated by reference to Exhibit 10.13 to the Company’ s Quarterly Report filed with the SEC on November 15, 2021). 10.47 + Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’ s Current Report on Form 8-K filed with the SEC on October 1, 2021). 10.48 + Amendment No. 1 Employment Agreement, dated October 8, 2021, by and between Orbsat Corp and Paul R. Thomson (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on October 8, 2021). 10.49 + Employment Agreement, dated October 8, 2021, by and between Orbsat Corp and Andrew Cohen (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K filed with the SEC on October 8, 2021). 10.50 + Restricted Stock Award Agreement, dated October 8, 2021, by and between Orbsat Corp and Andrew Cohen (incorporated by reference to Exhibit 10.50 to the Company’ s Current Report on Form 10-K filed with the SEC on March 31, 2022). 10.51 + Stock Option Agreement, dated October 8, 2021, by and between Orbsat Corp and Andrew Cohen (incorporated by reference to Exhibit 10.51 to the Company’ s Current Report on Form 10-K filed with the SEC on March 31, 2022). 10.52 + Amendment No. 2 Employment Agreement, dated October 8, 2021, by and between Orbsat Corp and Theresa Carlise (incorporated by reference to Exhibit 10.3 to the Company’ s Current Report on Form 8-K filed with the SEC on October 8, 2021). 10.53 + Director Services Agreement, dated January 11, 2022, between Orbsat Corp and Rodney Barreto (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on January 11, 2022). 10.54 Form of Securities Purchase Agreement dated as of December 31, 2021, by and among Orbsat Corp and the Investors (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on January 5, 2022). 10.55 Form of Registration Rights Agreement dated as of December 31, 2021, by and among Orbsat Corp and the Investors (incorporated by reference to Exhibit A of Exhibit 10.54 to this Annual Report on Form 10-K). 10.56 + Orbsat Corp Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on December 22, 2021). 10.57 + Orbsat Corp 2021 Incentive Award Plan (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K filed with the SEC on December 22, 2021). 10.58 + Employment Agreement, dated October 8, 2021, by and between Orbsat Corp and Andrew Cohen. (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K filed with the SEC on October 8, 2021). 10.59 + Amendment No. 1 Employment Agreement, dated October 8, 2021, by and between Orbsat Corp and Paul R. Thomson (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on October 8, 2021). 10.60 + Amendment No. 2 Employment Agreement, dated October 8, 2021, by and between Orbsat Corp and Theresa Carlise. (incorporated by reference to Exhibit 10.3 to the Company’ s Current Report on Form 8-K filed with the SEC on October 8, 2021). 93 Table of Contents Exhibit No. Description 10.61 + Form of Indemnity Agreement, , by and between Orbsat Corp and Douglas Ellenoff entered into on November 18, 2021 (incorporated by reference to Exhibit B of Exhibit 10.1 to the Company’ s Current Report on Form 8-K/A filed with the SEC on January 27, 2022). 10.62 + Form of Registration Rights Agreement by and between Orbsat Corp and Douglas Ellenoff entered into on November 18, 2021 (incorporated by reference to Exhibit A of Exhibit 10.1 to the Company’ s Current Report on Form 8-K/A filed with the SEC on January 27, 2022).. 10.63 + Restricted Stock Award Agreement, dated December 18, 2021, by and between Orbsat Corp and Charles M. Fernandez (275,000 shares of restricted stock) (incorporated by reference to Exhibit 10.63 to the Company’ s Current Report on Form 10-K filed with the SEC on March 31, 2022). 10.64 + Restricted Stock Award Agreement, dated December 18, 2021, by and between Orbsat Corp and Charles M. Fernandez (101,000 shares of restricted stock) (incorporated by reference to Exhibit 10.64 to the Company’ s Current Report on Form 10-K filed with the SEC on March 31, 2022). 10.65 + Restricted Stock Award Agreement, dated December 18, 2021, by and between Orbsat Corp and David Phipps (incorporated by reference to Exhibit 10.65 to the Company’ s Current Report on Form 10-K filed with the SEC on March 31, 2022). 10.66 + Form of Restricted Stock Award Agreement between the Company and each of Paul R Thomson (10,000 shares) and Theresa Carlise (15,000 shares), entered into in December 2021 (incorporated by reference to Exhibit 10.66 to the Company’ s Current Report on Form 10-K filed with the SEC on March 31, 2022). 10.67 + Form of Restricted Stock Award Agreement between the Company and each of Kendall Carpenter, Louis Cusimano, Hector Delgado and John E. Miller, entered into in December 2021 (incorporated by reference to Exhibit 10.67 to the Company’ s Current Report on Form 10-K filed with the SEC on March 31, 2022). 10.68 + Form of Stock Option Grant Notice and Agreement between Orbsat Corp and each of Charles M. Fernandez (75,000 shares), Paul R Thomson (10,000 shares) and Theresa Carlise (15,000 shares), entered into in December 2021 (incorporated by reference to Exhibit 10.68 to the Company’ s Current Report on Form 10-K filed with the SEC on March 31, 2022). 10.69 + Restricted Stock Award Agreement, dated December 20, 2021, by and between Orbsat Corp and Rodney Barreto (incorporated by reference to Exhibit 10.69 to the Company’ s Current Report on Form 10-K filed with the SEC on March 31, 2022). 10.70 + Amendment No. 1 Employment Agreement, dated May 2, 2022, by and between NextPlat Corp and Andrew Cohen (incorporated by reference to Exhibit 10.1 to the Company’ s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2022). 10.71 + Stock Option Agreement, dated July 1, 2022, by and between NextPlat Corp and Charles M. Fernandez (incorporated by reference to Exhibit 10.2 to the Company’ s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2022). 10.72 + Restricted Stock Agreement, dated July 22, 2022, by and between NextPlat Corp and Charles M. Fernandez (incorporated by reference to Exhibit 10.3 to the Company’ s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2022). 10.73 Securities Purchase Agreement, dated August 30, 2022, by and between NextPlat and Progressive Care Inc. (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on September 1, 2022) 10.74 Confidential Note Purchase and Release Agreement, dated August 30, 2022, by and between the Company, Progressive Care, Iliad Research and Trading, L.P., PharmCo, L.L.C., Charles Fernandez, Rodney Barreto, Daniyel Erdberg, and Sixth Borough Capital LLC (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on September 1, 2022). 10.75 Debt Modification Agreement dated August 30, 2022, by and between the Company, Progressive Care, Charles Fernandez, Rodney Barreto, Daniyel Erdberg, and Sixth Borough Capital LLC (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on September 1, 2022). 94 Table of Contents Exhibit No. Description 10.76 + Director Services Agreement dated as of September 28, 2022, by and between the Company and M. Cristina Fernandez (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K/A filed with the SEC on October 5, 2022). 10.77 + Stock Option Agreement, dated as of October 1, 2022, by and between the Company and M. Cristina Fernandez (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K/A filed with the SEC on October 5, 2022). 10.78 Securities Purchase Agreement dated November 16, 2022, by and between NextPlat and Progressive Care Inc. (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed with the SEC on November 18, 2022). 10.79 Form of Debenture (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K filed with the SEC on November 18, 2022). 10.80 Security Agreement, dated as of November 16, 2022, by Progressive Care, Inc., Touchpoint RX, LLC, Family Physicians RX, Inc., and ClearMetrX Inc. in favor of NextPlat Corp (incorporated by reference to Exhibit 10.3 to the Company’ s Current Report on Form 8-K filed with the SEC on November 18, 2022). 10.81 Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.4 to the Company’ s Current Report on Form 8-K filed with the SEC on November 18, 2022). 10.82 Employment Agreement, dated as of November 7, 2022, by and between the Company and Robert Bedwell (incorporated by reference to Exhibit 10.6 the Company’ s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2022). 10.83 Employment Agreement, dated as of November 14, 2022, by and between the Company and Paul Thomson (incorporated by reference to Exhibit 10.7 the Company’ s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2022). 10.84 Employment Agreement, dated as of November 14, 2022, by and between the Company and Cecile Munnik (incorporated by reference to Exhibit 10.8 the Company’ s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2022). 10.85 + Stock Option Agreement dated December 5, 2022, and effective as of November 7, 2022, by and between the Company and Robert Bedwell (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K Filed on December 5, 2022). 10.86 + Stock Option Agreement dated December 5, 2022, and effective as of November 14, 2022, by and between the Company and Cecile Munnik (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K Filed on December 5, 2022). 10.87 Form of Securities Purchase Agreement dated December 9, 2022, by and among the Company and the Investors (incorporated by reference to Exhibit 10.1 to the Company’ s Current Report on Form 8-K filed on December 13, 2022). 10.88 Form of Registration Rights Agreement dated December 9, 2022, by and among the Company and the Investors (incorporated by reference to Exhibit 10.2 to the Company’ s Current Report on Form 8-K filed on December 13, 2022). 10.89 Management Services Agreement, dated as of February 1, 2023, by and between NextPlat Corp and Progressive Care, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on May 15, 2023) 10.90 Form of Securities Purchase Agreement dated April 5, 2023 by and among the Company and the Investor (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 6, 2023) 10.91 Merchant Sourcing Agreement, dated as of April 20, 2023, by and between the Company and Alibaba.com Singapore E-Commerce Private Limited, a company organized under the laws of Singapore* (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 26, 2023) 10.92 Securities Purchase Agreement, dated May 5, 2023, by and between NextPlat and Progressive Care Inc. (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 11, 2023) 10.93 Form of PIPE Warrant (incorporated by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K filed on May 11, 2023) 10.94 Debt Conversion Agreement, dated May 9, 2023, by and between the NextPlat, Progressive Care Inc., Charles Fernandez, Rodney Barreto, Daniyel Erdberg, and Sixth Borough Capital LLC. (incorporated by reference from Exhibit 10.3 to the Company's Current Report on Form 8-K filed on May 11, 2023) 10.95 Form of Conversion Warrant (incorporated by reference from Exhibit 10.4 to the Company's Current Report on Form 8-K filed on May 11, 2023) 10.96 First Amendment to Securities Purchase Agreement, dated May 9,2023, by and between NextPlat and Progressive Care Inc. (incorporated by reference from Exhibit 10.5 to Current Report on Form 8-K filed with the SEC on May 11, 2023) 10.97 Voting Agreement, dated as of June 30, 2023, by and between NextPlat Corp, Charles M. Fernandez and Rodney Barreto (incorporated by reference from Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q filed on August 14, 2023) 10.98 Promissory Note, dated July 7, 2023, in the original principal amount of $250,000 made by Next Borough Capital Management to the order of NextPlat Corp. (incorporated by reference from Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q filed on August 14, 2023) 10.99 First Amendment to Employment Agreement, dated as of June 29, 2023, by and between NextPlat Corp and Cecile Munnik (incorporated by reference from Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q filed on August 14, 2023) 10.100 Distribution Agreement, dated as of October 12, 2023, by and between OPKO Health Spain, S.L.U. and NextPlat Corp (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 18, 2023) 21.1 * Subsidiaries of NextPlat Corp 23.1 * Consent of RBSM LLP 31.1 * Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 * Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1* Policy Relating to Recovery of Erroneously Awarded Compensation 101.ins* Inline XBRL Instance Document 101.sch* Inline XBRL Taxonomy Schema Document 101.cal* Inline XBRL Taxonomy Calculation Document 101.def* Inline XBRL Taxonomy Linkbase Document 101.lab* Inline XBRL Taxonomy Label Linkbase Document 101.pre* Inline XBRL Taxonomy Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) (1) Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedule or exhibit so furnished. * Filed herewith. + Management contract or compensatory plan or arrangement. 95 Table of Contents Item 16. Form 10-K Summary None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: April 11, 2024 NEXTPLAT CORP By: /s/ Charles M. Fernandez Charles M. Fernandez Title: Executive Chairman and Chief Executive Officer (Principal Executive Officer) By: /s/ Cecile Munnik Cecile Munnik Title: Chief Financial Officer, (Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Charles M. Fernandez Chief Executive Officer and Executive Chairman April 11, 2024 Charles M. Fernandez (Principal Executive Officer) /s/ Cecile Munnik Chief Financial Officer (Principal Financial Officer) April 11, 2024 Cecile Munnik /s/ David Phipps President and Chief Executive Officer of Global Operations and Director April 11, 2024 David Phipps /s/ Douglas S. Ellenoff Vice Chairman and Chief Business Development Strategist and Director April 11, 2024 Douglas Ellenoff /s/ Hector Delgado Director April 11, 2024 Hector Delgado /s/ Kendall W. Carpenter Director April 11, 2024 Kendall Carpenter /s/ Louis Cusimano Director April 11, 2024 Louis Cusimano /s/ John E. Miller Director April 11, 2024 John E. Miller /s/ Rodney Barreto Director April 11, 2024 Rodney Barreto /s/ Maria Cristina Fernandez Director April 11, 2024 Maria Cristina Fernandez 96 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES Report of Independent Registered Public Accounting Firm RBSM LLP, New York, NY, (PCAOB ID. 587) F-2 Consolidated Financial Statements Consolidated Balance Sheets as of December 31, 2023 and 2022 F-5 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2023 and 2022 F-6 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023 and 2022 F-7 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022 F-8 Notes to Consolidated Financial Statements F-9 F-1 Table of Contents New York Office: 805 Third Avenue New York, NY 10022 212.838-5100 www.rbsmllp.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of NextPlat Corp and Subsidiaries Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of NextPlat Corp and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. F-2 Table of Contents Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Goodwill and Other Intangibles arising from the acquisition of Progressive Care, Inc. ( “ RXMD ” ) – Refer to Notes 2, 3, 4 and 14 to the consolidated financial statements Critical Audit Matter Description As disclosed in Note 3, Goodwill arises in connection with acquisitions. The excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired is recorded as goodwill. As disclosed in Note 4, on July 1, 2023, the Company gained voting control of RXMD and therefore, became a consolidated subsidiary of the Company on July 1, 2023. Auditing the accounting for the acquisition was complex due to the significant estimation uncertainty in determining the fair values of identified intangible assets, which consisted of Trade Names, Development Technology, Pharmacy Records and Goodwill. The principal considerations for our determination that performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions required a high degree of auditor judgment and an increased effort, including the need to involve a fair value specialist. How the Critical Audit Matter Was Addressed in the Audit Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others: ● Utilizing personnel with specialized knowledge and skill in valuation to assist in; i) assessing the appropriateness of the valuation methodology for the intangible assets, ii) evaluating the reasonableness of the growth rates, percent of revenues derived and discount rate used in the income approach, iii) evaluating the reasonableness of the assumptions and estimates used in the valuation methodologies. ● Evaluate the reasonableness of management’s significant estimates. ● Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the fair value approach and (ii) the reasonableness of significant assumptions and estimates. ● Reviewed and assessed the appropriateness of adjustments to Goodwill, Other Intangibles and other Assets and Liabilities acquired based on changes to their estimated fair values. F-3 Table of Contents Goodwill and Other Intangibles Impairment Assessments – RXMD acquisition – Refer to Notes 3 and 14 to the consolidated financial statements Critical Audit Matter Description As described in Note 14 to the consolidated financial statements, the Company’s goodwill balance was approximately $731,000 as of December 31, 2023. The Company also has amortizable identifiable intangible assets of approximately $14,423,000, and are related to the RXMD Healthcare Operations reporting unit. Management tests these assets annually for impairment or more frequently when potential impairment triggering events are present. Goodwill is tested for impairment by comparing the estimated fair value of a reporting unit to its carrying value. The principal considerations for our determination that performing procedures relating to the goodwill and intangible asset impairment assessments of the RXMD Healthcare Operations reporting unit is a critical audit matter because (i) the significant, subjective and complex judgments used by management when determining the fair value estimates of the reporting units; (ii) the high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the significant assumptions used in management’s fair value estimates; and (iii) the audit effort involved in the use of professionals with specialized skill and knowledge including a valuation expert. How the Critical Audit Matter Was Addressed in the Audit Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. ● These procedures included, among others, (i) testing management’s process for determining the fair value estimates of the RXMD Healthcare Operations reporting unit; (ii) testing the completeness and accuracy of the underlying data used in the fair value approach; and (iii) evaluating the reasonableness of the significant assumptions used by management related to market multiples, peer group and comparable transaction selection and selection of relevant financial matrices for concluding the fair value of reporting unit and future levels of revenue growth. ● Evaluating management’s assumptions related to the future levels of revenue growth involved evaluating whether the assumptions were reasonable considering (i) current and past performance of the reporting units; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. ● Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the fair value approaches and (ii) the reasonableness of significant assumptions of relevant financial matrices for concluding the fair value of reporting unit and future levels of revenue growth. /s/ RBSM LLP We have served as the Company’s auditor since 2014. New York, NY April 11, 2024 PCAOB ID Number 587 F-4 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except shares and par data) December 31, 2023 2022 ASSETS Current Assets Cash $ 26,307 $ 18,891 Accounts receivable, net 8,923 384 Receivables - other, net 1,846 - Inventory, net 5,135 1,287 Unbilled revenue 189 142 VAT receivable 342 433 Prepaid expenses 640 46 Notes receivable due from related party 256 - Total Current Assets 43,638 21,183 Property and equipment, net 3,989 1,246 Goodwill 731 - Intangible assets, net 14,423 50 Operating right of use assets, net 1,566 855 Finance right-of-use assets, net 22 - Equity method investment - 5,261 Deposits 39 - Prepaid expenses, net of current portion 61 49 Total Other Assets 16,842 6,215 Total Assets $ 64,469 $ 28,644 LIABILITIES AND EQUITY Current Liabilities Accounts payable and accrued expenses $ 13,176 $ 1,523 Contract liabilities 42 36 Notes payable 312 60 Due to related party 18 28 Operating lease liabilities 532 209 Finance lease liabilities 18 - Income taxes payable 139 94 Liabilities from discontinued operations - 112 Total Current Liabilities 14,237 2,062 Long Term Liabilities: Notes payable, net of current portion 1,211 156 Operating lease liabilities, net of current portion 929 650 Finance lease liabilities, net of current portion 5 - Total Liabilities 16,382 2,868 Commitments and Contingencies - - Equity Preferred stock ($ 0.0001 par value; 3,333,333 shares authorized) - - Common stock ($ 0.0001 par value; 50,000,000 shares authorized, 18,724,596 and 14,402,025 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively) 2 1 Additional paid-in capital 67,170 56,963 Accumulated deficit ( 34,925 ) ( 31,147 ) Accumulated other comprehensive loss ( 63 ) ( 41 ) Equity attributable to NextPlat Corp stockholders 32,184 25,776 Equity attributable to noncontrolling interests 15,903 - Total Equity 48,087 25,776 Total Liabilities and Equity $ 64,469 $ 28,644 See accompanying notes to consolidated financial statements. F-5 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands, except per shares data) For the Years Ended December 31, 2023 2022 Sales of products, net $ 32,389 $ 11,710 Revenues from services 5,367 - Revenue, net 37,756 11,710 Cost of products 26,313 9,221 Cost of services 132 - Cost of revenue 26,445 9,221 Gross profit 11,311 2,489 Operating expenses: Selling, general and administrative 9,910 5,085 Salaries, wages and payroll taxes 6,643 2,565 Goodwill impairment 13,895 - Professional fees 1,981 1,552 Depreciation and amortization 2,110 490 Total operating expenses 34,539 9,692 Loss before other (income) expense ( 23,228 ) ( 7,203 ) Other (income) expense: Interest expense 79 24 Interest earned ( 620 ) ( 21 ) Asset write-off 28 - Other income ( 317 ) - Foreign currency exchange rate variance ( 107 ) 129 Total other (income) expense ( 937 ) 132 Loss before income taxes and equity in net loss of affiliate ( 22,291 ) ( 7,335 ) Income taxes ( 28 ) ( 87 ) Loss before equity in net loss of affiliate ( 22,319 ) ( 7,422 ) Gain on remeasurement of fair value of equity interest in affiliate prior to acquisition 11,352 - Equity in net loss of affiliate ( 1,440 ) ( 1,739 ) Net loss ( 12,407 ) ( 9,161 ) Net loss attributable to noncontrolling interest 8,629 - Net loss attributable to NextPlat Corp $ ( 3,778 ) $ ( 9,161 ) Comprehensive loss: Net loss $ ( 12,407 ) $ ( 9,161 ) Foreign currency loss ( 22 ) ( 44 ) Comprehensive loss $ ( 12,429 ) $ ( 9,205 ) NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 3,778 ) $ ( 9,161 ) Weighted number of common shares outstanding – basic 17,494 9,592 Weighted number of common shares outstanding – diluted 17,494 9,592 Basic loss per share $ ( 0.22 ) $ ( 0.96 ) Diluted loss per share $ ( 0.22 ) $ ( 0.96 ) See accompanying notes to consolidated financial statements. F-6 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUI TY FOR THE YEARS ENDED December 31, 2023 AND 2022 (In thousands ) Common Stock Additional $0.0001 Par Value Paid in Accumulated Comprehensive Stockholders’ Noncontrolling Total Shares Amount Capital Deficit Income (Loss) Equity NextPlat Corp Interests Equity Balance, December 31, 2021 7,053 $ 1 $ 39,513 $ ( 21,986 ) $ 3 $ 17,531 $ - $ 17,531 Issuance of common stock related to January offering 2,230 - 7,005 - - 7,005 - 7,005 Issuance of common stock related to December offering 4,575 - 7,472 - - 7,472 - 7,472 Stock-based compensation in connection with restricted stock awards 544 - 2,151 - - 2,151 - 2,151 Stock-based compensation in connection with options granted - - 822 - - 822 - 822 Comprehensive loss - - - - ( 44 ) ( 44 ) - ( 44 ) Net loss - - - ( 9,161 ) - ( 9,161 ) - ( 9,161 ) Balance, December 31, 2022 14,402 $ 1 $ 56,963 $ ( 31,147 ) $ ( 41 ) $ 25,776 $ - $ 25,776 Issuance of common stock related to April offering 3,429 1 5,999 - - 6,000 - 6,000 Issuance of common stock related to exercise of warrants 105 - 184 - - 184 - 184 Issuance of common stock related to restricted stock award 789 - 2,468 - - 2,468 300 2,768 Stock-based compensation in connection with options granted - - 1,524 - - 1,524 1,052 2,576 Stock-based compensation in connection with warrants granted - - 32 - - 32 - 32 Acquisition of subsidiary and noncontrolling interests - - - - - - 23,180 23,180 Comprehensive income - - - - ( 22 ) ( 22 ) - ( 22 ) Net loss - - - ( 3,778 ) - ( 3,778 ) ( 8,629 ) ( 12,407 ) Balance, December 31, 2023 18,725 $ 2 $ 67,170 $ ( 34,925 ) $ ( 63 ) $ 32,184 $ 15,903 $ 48,087 See accompanying notes to consolidated financial statements. F-7 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands ) For the Years Ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 12,407 ) $ ( 9,161 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 758 465 Change in provision for doubtful accounts 47 - Amortization of intangible assets 1,337 25 Amortization of right-of-use assets - operating leases 417 106 Amortization of right-of-use assets - finance leases 15 - Write-off of digital assets 28 43 Goodwill impairment 13,895 - Gain on remeasurement of fair value of equity interest in affiliate prior to acquisition ( 11,352 ) - Equity in net loss of affiliate 1,440 1,739 Stock-based compensation 5,376 2,974 Change in operating assets and liabilities: Accounts receivable ( 3,449 ) ( 34 ) Inventory ( 2,217 ) ( 267 ) Unbilled revenue ( 47 ) ( 41 ) Prepaid expense 22 52 Notes receivable ( 256 ) - Other assets - 49 VAT receivable 91 59 Accounts payable and accrued expenses 3,231 453 Operating lease liabilities ( 464 ) ( 101 ) Income taxes payable 45 37 Contract liabilities 6 - Liabilities from discontinued operations ( 112 ) - Net cash used in operating activities ( 3,596 ) ( 3,602 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 647 ) ( 716 ) Cash acquired in acquisition of subsidiary 7,352 - Capital contributions to equity method investee ( 1,506 ) ( 7,000 ) Net cash provided by (used in) investing activities 5,199 ( 7,716 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of note payable, related party, net ( 10 ) ( 7 ) Issuance of common stock for PIPE transaction 6,000 13,832 Payment of stock issuance costs - ( 754 ) Proceeds from exercise of warrants 184 - Payments on finance lease liabilities ( 15 ) - Repayments of notes payable ( 299 ) ( 60 ) Net cash provided by financing activities 5,860 13,011 Effect of exchange rate on cash ( 47 ) ( 70 ) Net increase in cash 7,416 1,623 Cash beginning of year 18,891 17,268 Cash end of year $ 26,307 $ 18,891 SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for Interest $ 531 $ 11 Income tax $ - $ 10 Supplemental schedule of non-cash investing and financing activities: Business combination without transfer of consideration $ 39,859 $ - See accompanying notes to consolidated financial statements F-8 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Organization and Nature of Operations. The term “Company” refers to NextPlat Corp and its wholly, majority owned and controlled subsidiaries, except where the context requires otherwise or where otherwise indicated. NextPlat Corp: NextPlat Corp, a Nevada corporation (the “Company”, “NextPlat”, “we”), formerly Orbsat Corp was incorporated in 1997. The Company operates two main e-commerce websites as well as 25 third -party e-commerce storefronts on platforms such as Alibaba, Amazon and Walmart. These e-commerce venues form an effective global network serving thousands of consumers, enterprises, and governments. NextPlat has announced its intention to broaden its e-commerce platform and is implementing a comprehensive system upgrade to support this initiative. We provide a comprehensive array of Satellite Industry communication services and related equipment sales. Our wholly-owned subsidiary, Global Telesat Communications Limited (“GTC”), was formed under the laws of England and Wales in 2008. On February 19, 2015, we entered into a share exchange agreement with GTC and all of the holders of the outstanding equity of GTC pursuant to which we acquired all of the outstanding equity in GTC. Our wholly-owned subsidiary, Orbital Satcom Corp. (“Orbital Satcom”), a Nevada corporation, was formed on November 14, 2014. On June 22, 2022, NextPlat B.V. (“NXPLBV”) was formed in Amsterdam, Netherlands, as a wholly owned subsidiary of NextPlat Corp. Presently, NXPLBV does not have any active operations Progressive Care Inc.: Progressive Care Inc. (“Progressive Care”) was incorporated under the laws of the state of Delaware on October 31, 2006. Progressive, through its wholly-owned subsidiaries, Pharmco, LLC (“Pharmco 901” ), Touchpoint RX, LLC doing business as Pharmco Rx 1002, LLC (“Pharmco 1002” ), Family Physicians RX, Inc. doing business as PharmcoRx 1103 and PharmcoRx 1204 (“FPRX” or “Pharmco 1103” and “Pharmco 1204” ) (pharmacy subsidiaries collectively referred to as “Pharmco”), and ClearMetrX Inc. (“ClearMetrX”) is a personalized healthcare services and technology company that provides prescription pharmaceuticals and risk and data management services to healthcare organizations and providers. Pharmco 901 was formed on November 29, 2005 as a Florida Limited Liability Company and is a 100 % owned subsidiary of Progressive Care. Pharmco 901 was acquired by Progressive on October 21, 2010. Progressive currently delivers prescriptions to Florida’s diverse population and ships medications to patients in states where they hold non-resident pharmacy licenses as well. Progressive currently holds Florida Community Pharmacy Permits at all Florida pharmacy locations and the Pharmco 901 location is licensed as a non-resident pharmacy in the following states: Arizona, Colorado, Connecticut, Georgia, Illinois, Minnesota, Nevada, New Jersey, New York, Pennsylvania, Texas, and Utah. Progressive is able to dispense to patients in the state of Massachusetts without a non-resident pharmacy license because Massachusetts does not require such a license for these activities. Pharmco 1103 is a pharmacy with locations in North Miami Beach and Orlando, Florida that provides Pharmco’s pharmacy services to Miami-Dade County, Broward County, the Orlando/Tampa corridor, and the Treasure Coast of Florida. Progressive acquired all the ownership interests in Pharmco 1103 in a purchase agreement entered into on June 1, 2019. Pharmco 1002 is a pharmacy located in Palm Springs, Florida that provides Pharmco’s pharmacy services to Palm Beach, St. Lucie and Martin Counties, Florida. Progressive acquired all the ownership interests in Pharmco 1002 in a purchase agreement entered into on July 1, 2018. ClearMetrX was formed on June 10, 2020 and provides third -party administration (“TPA”) services to 340B covered entities. ClearMetrX also provides data analytics and reporting services to support and improve care management for health care organizations. RXMD Therapeutics was formed on October 1, 2019. RXMD Therapeutics has had no operating activity to date. F- 9 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 2. Basis of Presentation and Principles of Consolidation These consolidated financial statements have been prepared by management in accordance with general accepted accounting principles in the United States of America (“U.S. GAAP”) and this basis assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Business acquisition of Progressive Care, Inc. On July 1, 2023, the Company, Charles M. Fernandez, Executive Chairman and Chief Executive Officer of the Company, and Rodney Barreto, Director of the Company, exercised common stock purchase warrants issued by Progressive Care (the “RXMD Warrants”) and were issued shares of Progressive Care common stock. After the exercise of the RXMD Warrants, the Company and Messrs. Fernandez and Barreto collectively owned 53 % of Progressive Care’s voting common stock. At the time of exercise, all of the above RXMD Warrants were in-the-money. Also on July 1, 2023, the Company entered into a voting agreement with Messrs. Fernandez and Barreto whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs. Fernandez and Barreto agreed to vote all of their shares of Progressive Care common stock (including any new shares of Progressive Care common stock acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Progressive Care common stock) that they own, directly or indirectly, in the same manner that NextPlat votes its Progressive Care common stock and equivalents. The voting agreement is irrevocable and perpetual in term. The exercise of the stock options, along with the entry into the voting agreement, resulted in a change in control of Progressive Care under the voting interest model in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combination, and was accounted for as a business acquisition. Therefore, Progressive Care became a consolidated subsidiary of the Company on July 1, 2023. The Company previously accounted for its equity interest in Progressive Care as an equity method investment. The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Use of Estimates In preparing the Consolidated Financial Statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition, and revenues and expenses for the years then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, assumptions used to calculate stock-based compensation, fair value of net assets acquired in the business combination with Progressive Care. common stock and options issued for services, net realizable value of accounts receivables the useful lives of property and equipment and intangible assets, the estimate of the fair value of the lease liability and related right of use assets, pharmacy benefit manager ("PBM") fee estimates, and the estimates of the valuation allowance on deferred tax assets and corporate income taxes. Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. F- 10 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 3. Summary of Significant Accounting Policies The significant accounting policies of the Company are described below the fiscal year ended December 31, 2023. Progressive Care became a consolidated subsidiary of the Company on July 1, 2023 and as a result the Company has incorporated certain significant accounting policies of Progressive Care for the year ended December 31, 2023. Discontinued Operations The Company’s former operations were developing and manufacturing products and services, which reduce fuel costs, save power and energy and protect the environment. The products and services were made available for sale into markets in the public and private sectors. In December 2009, the Company discontinued these operations and disposed of certain of its subsidiaries. The remaining liabilities for discontinued operations are presented in the consolidated balance sheets under the caption “Liabilities from discontinued operation” and relates to the discontinued operations of developing and manufacturing of energy saving and fuel-efficient products and services. The carrying amounts of the major classes of these liabilities as of December 31, 2023 , and 2022 are summarized as follows (in thousands): December 31, 2023 December 31, 2022 Assets of discontinued operations $ - $ - Liabilities Accounts payables and accrued expenses $ - $ ( 112 ) Liabilities from discontinued operations $ - $ ( 112 ) Liquidity January 2022 Private Placement of Common Stock On December 31, 2021, after markets closed, a securities purchase agreement (the “Purchase Agreement”) was circulated to, and signatures were received from, certain institutional and accredited investors (the “December Investors”) in connection with the sale in a private placement by the Company of 2,229,950 shares of the Company’s common stock (the “December Offering”). On January 2, 2022, the Company delivered to December Investors a fully executed Purchase Agreement, which was dated December 31, 2021. The purchase price for the common stock sold in the December Offering was $ 3.24 per share, the closing transaction price reported by Nasdaq on December 31, 2021. The closing of the December Offering occurred on January 5, 2022. The Company received gross proceeds from the sale of the common stock in the December Offering of approximately $ 7.2 million. December 2022 Private Placement of Common Stock On December 9, 2022, the Company entered into a securities purchase agreement with certain institutional and accredited investors for the sale by the Company in a private placement of 4,575,429 units, each unit comprising (i) one share of the Company’s common stock, and (ii) one warrant to purchase one share of common stock. The offering price of the units was $ 1.75 per unit. The warrants included in the units are exercisable at a price of $ 1.75 per share and expire three years from the date of issuance. On December 9, 2022, the Company entered into placement agency agreement (the “Placement Agency Agreement”) with Dawson James Securities, Inc. (“Dawson James”). The Company has agreed to pay Dawson James a placement agent fee of 6 % of the gross proceeds received in the private placement and 3 % on all proceeds from officers and directors including any directed orders from the Company. As additional compensation under the Placement Agency Agreement, the Company will issue Dawson James warrants (the “Placement Agent Warrants”) to purchase up to 549,051 shares of Common Stock with an exercise price of $ 1.75 per share. The Placement Agent Warrants are exercisable at any time and from time to time during the three -year period commencing on the six -month anniversary of the closing date. The Company reimbursed Dawson for up to $ 100,000 for its legal and due diligence expenses. The offering closed on December 14, 2022, and the Company received gross proceeds of approximately $ 8.0 million for the units. F- 11 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) April 2023 Private Placement of Common Stock On April 5, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale by the Company in a private placement of 3,428,571 shares of the Company’s common stock, $ 0.0001 par value per share (the “Common Stock”). The offering price of the Common Stock was $ 1.75 per share, the closing price of the Common Stock on April 4, 2023. On April 11, 2023, the Private Placement closed. Upon the closing of the Private Placement, the Company received gross proceeds of approximately $ 6.0 million. The Company sold the Common Stock to the Investor in reliance on the exemption from registration afforded by Section 4 (a)( 2 ) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws. As of the date of this report, the Company’s existing cash resources and existing borrowing availability are sufficient to support planned operations for the next 12 months. As a result, management believes that the Company’s existing financial resources are sufficient to continue operating activities for at least one year past the issuance date of the financial statements. Cash and Cash Equivalents The Company places its cash with high credit quality financial institutions. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 . All cash amounts in excess of $ 250,000 , approximately $ 3.1 million, are unsecured. In April 2023, the Company entered into a deposit placement agreement for Insured Cash Sweep Service (“ICS”). This service is a secure, and convenient way to access FDIC protection on large deposits, earn a return, and enjoy flexibility. The Company believes that the ICS agreement will mitigate its credit risk as it relates to uninsured FDIC amounts in excess of $250,000. Accounts Receivable and Allowance for Doubtful Accounts The Company has a policy of reserving for questionable accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are offset against sales and relieved from accounts receivable, after all means of collection have been exhausted and the potential for recovery is considered remote. Progressive Care trade accounts receivable are stated at the invoiced amount. Trade accounts receivable primarily include amounts from third -party pharmacy benefit managers (“PBMs”) and insurance providers and are based on contracted prices. Trade accounts receivable are unsecured and require no collateral. Progressive Care records an allowance for doubtful accounts for estimated differences between the expected and actual payment of accounts receivable. These reductions were made based upon reasonable and reliable estimates that were determined by reference to historical experience, contractual terms, and current conditions. Each quarter, the Progressive Care reevaluates its estimates to assess the adequacy of its allowance and adjusts the amounts as necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Inventories Inventories are valued at the lower of cost or net realizable value, using the first -in first -out cost method. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analysis and assumptions including, but not limited to, historical usage, expected future demand and market requirements. A change to the carrying value of inventories is recorded to cost of goods sold. Prepaid Expenses Prepaid expenses current and long term amounted to approximately $ 640,000 and $ 61,000 , respectively for the year ended December 31, 2023 , as compared to $ 46,000 and $ 49,000 for the year ended December 31, 2022 . Prepaid expenses include prepayments in cash for accounting fees, which are being amortized over the terms of their respective agreements, as well as cost associated with certain contract liabilities. The current portion consists of costs paid for future services which will occur within a year. Investments The Company applies the equity method of accounting to investments when it has significant influence, but not controlling interest, in the investee. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The carrying value of our equity method investment is reported as “equity method investment” on the consolidated balance sheets. The Company’s equity method investment is reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and dividend paid, if any. The Company’s proportionate share of the net loss resulting from these investments is reported under the line item captioned “equity in net loss of affiliate” in the consolidated statements of operations and comprehensive loss. Note 15 contains additional information on the equity method investment. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Management reviewed the underlying net assets of the investee as of December 31, 2023 and determined that the Company’s proportionate economic interest in the investee indicate that the investments were not impaired. F- 12 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Foreign Currency Translation The Company’s reporting currency is U.S. Dollars. The accounts of one of the Company’s subsidiaries, GTC, is maintained using the appropriate local currency, Great British Pound, as the functional currency. All assets and liabilities are translated into U.S. Dollars at balance sheet date, shareholders’ equity is translated at historical rates and revenue and expense accounts are translated at the average exchange rate for the year or the reporting period. The translation adjustments are reported as a separate component of stockholders’ equity, captioned as accumulated other comprehensive (loss) gain. Transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the statements of operations. The relevant translation rates are as follows: for the year ended December 31, 2023 , closing rate at $ 1.27 US$: GBP, yearly average rate at $ 1.24 US$: GBP, for the year ended December 31, 2022 closing rate at $ 1.21 US$: GBP, yearly average rate at $ 1.24 US$: GBP. Revenue Recognition and Unearned Revenue In accordance with ASU No. 2016 - 12, Revenue from Contracts with Customers (Topic 606 ): Narrow-Scope Improvements and Practical Expedient , which is to ( 1 ) clarify the objective of the collectability criterion for applying paragraph 606 - 10 - 25 - 7; ( 2 ) permit an entity to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price; ( 3 ) specify that the measurement date for noncash consideration is contract inception; ( 4 ) provide a practical expedient that permits an entity to reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations; ( 5 ) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP before the date of initial application, and ( 6 ) clarify that an entity that retrospectively applies the guidance in Topic 606 to each prior reporting period is not required to disclose the effect of the accounting change for the period of adoption. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. There was no impact as a result of adopting this ASU on the financial statements and related disclosures. Based on the terms and conditions of the product arrangements, the Company believes that its products and services can be accounted for separately as its products and services have value to the Company’s customers on a stand-alone basis. When a transaction involves more than one product or service, revenue is allocated to each deliverable based on its relative fair value; otherwise, revenue is recognized as products are delivered or as services are provided over the term of the customer contract. e-Commerce Operations: The Company recognizes revenue from satellite services when earned, as services are rendered or delivered to customers. Equipment sales revenue is recognized when the equipment is delivered to and accepted by the customer. Only equipment sales are subject to warranty. Historically, the Company has not incurred significant expenses for warranties. Equipment sales which have been prepaid, before the goods are shipped are recorded as contract liabilities and once shipped is recognized as revenue. The Company also records as contract liabilities, certain annual plans for airtime, which are paid in advance. Once airtime services are incurred, they are recognized as revenue. Unbilled revenue is recognized for airtime plans whereby the customer is invoiced for its data usage the following month after services are incurred. The Company’s customers generally purchase a combination of our products and services as part of a multiple element arrangement. The Company’s assessment of which revenue recognition guidance is appropriate to account for each element in an arrangement can involve significant judgment. This assessment has a significant impact on the amount and timing of revenue recognition. The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. The five -step model is applied to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services transferred to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize revenue in the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Contract liabilities are shown separately in the consolidated balance sheets as current liabilities. At December 31, 2023 , we had contract liabilities of approximately $ 42,000 . At December 31, 2022 , we had contract liabilities of approximately $ 36,000 . F- 13 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Healthcare Operations: The Company provides prescription pharmaceuticals, COVID- 19 related diagnostics and vaccinations, TPA services, and contracted pharmacy services for 340B covered entities under the 340B Drug Discount Pricing Program. Under the terms of the contracted pharmacy services for 340B covered entities, the Company acts as a pass-through for reimbursements on prescription claims adjudicated on behalf of the 340B covered entities in exchange for a dispensing fee per prescription. The Company recognizes product sales from prescriptions dispensed to patients (customers) at the time the drugs are physically delivered to a customer or when a customer picks up their prescription, which is the point in time when control transfers to the customer. 340B dispensing fees are a component of 340B contract revenue, which are recognized at the time the drugs are received by the patient, by either delivery or customer pick up. Each prescription claim is considered an arrangement with the customer and is a separate performance obligation. Payments are received directly from the customer at the point of sale, or the customers’ insurance provider is billed electronically. For third -party medical insurance and other claims, authorization is obtained to ensure payment from the customer’s insurance provider before the medication is dispensed to the customer. Authorization is obtained for these sales electronically and a corresponding authorization number is issued by the customer’s insurance provider. The Company is the agent in all of the 340B pharmacy dispensing service agreements transactions with 340B covered entities and not the principal in the transactions. Thus, the Company only recognizes its net fee for the prescription dispensing transactions and not the gross billing and cost of goods sold for the drugs dispensed. The Company accrues an estimate of PBM fees, including direct and indirect remuneration (“DIR”) fees, which are assessed or expected to be assessed by payers at some point after adjudication of a claim, as a reduction of prescription revenue at the time revenue is recognized. Changes in the estimate of such fees are recorded as an adjustment to revenue when the change becomes known. DIR fees are fees charged by PBMs to pharmacies for network participation as well as periodic reimbursement reconciliations. For some PBMs, DIR fees are charged at the time of the settlement of a pharmacy claim. Other PBMs do not determine DIR fees at the claim settlement date, and therefore DIR fees are collected from pharmacies after claim settlement, often as clawbacks of reimbursements based on factors that vary from plan to plan. For example, two PBMs calculate DIR fees on a trimester basis and charge the Company for these fees as reductions of reimbursements paid to the Company two to three months after the end of the trimester (e.g., DIR fees for January – April 2023 claims were clawback by these PBMs in July – August 2023). For DIR fees that are not collected at the time of claim settlement, the Company records an accrued liability at each reporting date for estimated DIR fees that are expected to be collected by the PBMs in a future period. The estimated liability for these fees is highly subjective and the actual amount collected may differ from the accrued liability. The uncertainty of management’s estimates is due to inadequate disclosure to the Company by the PBMs as to exactly how these fees are calculated either at the time the DIR fees are actually assessed and reported to the Company. The detail level of the disclosure of assessed DIR fees varies based on the information provided by the PBM. Billings for most prescription orders are with third -party payers, including Medicare, Medicaid, and insurance carriers. Customer returns are nominal. The Company recognizes revenue from TPA services as it satisfies the performance obligations under the TPA contract with a 340B covered entity. TPA services provided to covered entities include consulting services, accounting and reconciliation of contract pharmacy billings, and various compliance services. The covered entity simultaneously receives and consumes benefits as the Company performs services under the TPA contract. These services are capable of being distinct from one another, e.g., the covered entity may receive benefit from each separate service, but in the context of a TPA contract, the services are not distinct with the context of the TPA contract. Instead, the Company provides a significant service of integrating the services into a combined output that benefits the covered entity. Therefore, the Company considers the combined services to be a single performance obligation in each TPA contract. For each TPA contract, the Company recognizes revenue by measuring the progress toward complete satisfaction of each performance obligation. The Company uses various observable output methods in measuring progress toward satisfaction of each performance obligation, most notably gross billings under each contract. ASC 606 provides a practical expedient wherein an entity may recognize revenue in the amount to which it has a right to invoice a customer if the entity has a right to consideration from the customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. This expedient could be available, for example, for a service contract in which an entity bills a fixed amount for each hour of service provided. The Company believes that this practical expedient applies to its TPA contracts and we have elected this method in measuring revenue over the TPA contract term. The Company recognizes COVID- 19 testing revenue when the tests are performed and results are delivered to the customer. Each test is considered an arrangement with the customer and is a separate performance obligation. Payment is generally received in advance from the customer. F- 14 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Cost of Product Sales and Services Cost of sales consists primarily of materials, airtime and overhead costs incurred internally and amounts incurred to contract manufacturers to produce our products, airtime and other implementation costs incurred to install our products and train customer personnel, and customer service and third -party original equipment manufacturer costs to provide continuing support to our customers. There are certain costs which are deferred and recorded as prepaids, until such revenue is recognized. Refer to revenue recognition above as to what constitutes deferred revenue. Shipping and handling costs are included as a component of costs of product sales in the Company’s consolidated statements of operations because the Company includes in revenue the related costs that the Company bills its customers. Advertising Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred. Advertising expense was approximately $ 188,000 and $ 93,000 for the years ended December 31, 2023 and 2022 , respectively. Intangible Assets Acquired intangible assets with finite lives other than goodwill are amortized over their useful lives. For intangible assets acquired in a business combination, the estimated fair values of the assets received are used to establish their recorded values. Acquired intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite. Valuation techniques consistent with the market approach, income approach, and/or cost approach are used to measure fair value. Intangible assets subject to amortization represent the fair value of pharmacy records, tradenames and customer contracts acquired, and capitalized software development costs. In valuing these assets, the Company makes assumptions regarding useful lives and projected growth rates, and significant judgment is required. The Company periodically reviews its identifiable intangible assets for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the carrying amounts of those assets exceed their respective fair values, additional impairment tests are performed to measure the amount of the impairment losses, if any. Pharmacy records and developed software are amortized over 5 years. Tradenames and customer contracts are amortized over 10 years. Useful lives of intangible assets are periodically evaluated for reasonableness and the assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may no longer be recoverable. Business acquisitions The Company records business acquisitions using the acquisition method of accounting. All of the assets acquired, liabilities assumed, and contractual contingencies are recognized at their fair value on the acquisition date. The application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets that are depreciated and amortized and goodwill. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Acquisition-related expenses and restructuring costs are recognized separately from the business combination and are expensed as incurred. The Company uses a measurement period following the acquisition date to gather information that existed as of the acquisition date that is needed to determine the fair value of the assets acquired, liabilities assumed and equity interests. The measurement period ends once all information is obtained, but no later than one year from the acquisition date Goodwill Goodwill represents the excess of the purchase price over the value assigned to net tangible and identifiable intangible assets. Progressive Care, which is our Healthcare Operations, is considered to be the reporting unit for goodwill. Valuation techniques consistent with the market approach, income approach, and/or cost approach are used to measure fair value. Goodwill and other indefinite-lived intangible assets are assessed annually for impairment in the fourth fiscal quarter and in interim periods if events or changes in circumstances indicate that the assets may be impaired. F- 15 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Property and Equipment Property and equipment are carried at historical cost less accumulated depreciation. Depreciation is based on the estimated service lives of the depreciable assets and is calculated using the straight-line method. Expenditures that increase the value or productive capacity of assets are capitalized. Fully depreciated assets are retained in the property and equipment, and accumulated depreciation accounts until they are removed from service. When property and equipment are retired, sold or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Repairs and maintenance are expensed as incurred. The estimated useful lives of property and equipment are generally as follows: Years Building 40 Building improvements Remaining life of the building Leasehold improvements Lessor of the estimated useful life or life of the lease Office furniture and fixtures 4 - 5 Computer equipment 3 - 4 Rental equipment 4 Vehicles 3 - 5 Appliques 10 Website development 2 F- 16 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Depreciation expense for the years ended December 31, 2023 , and 2022 was approximately $ 758,000 and $ 465,000 , respectively. Impairment of Long-lived Assets The Company reviews its long-lived assets, comprised of property and equipment, right-of-use assets, and intangible assets, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and consider market participants in accordance with ASC 360 - 10, Accounting for the Impairment or Disposal of Long-Lived Assets . The Company evaluates the long-lived assets of the reporting units for impairment at the lowest asset group level for which individual cash flows can be identified. When evaluating long-lived assets for potential impairment, the carrying amount of the asset group is compared to the estimated future undiscounted cash flows. The impairment loss calculation compares the carrying amount of the assets to the fair value based on estimated discounted future cash flows. If required, an impairment loss is recorded for that portion of the asset’s carrying value in excess of fair value. As of December 31, 2023, there were no indications that the carrying amounts of our long-lived assets exceeded their respective fair values. The Company did not consider it necessary to record any impairment charges during the years ended December 31, 2023 and December 31, 2022 , respectively. Fair Value of Financial Instruments Derivatives are required to be recorded on the balance sheet at fair value. These derivatives, including embedded derivatives in the Company’s structured borrowings, are separately valued and accounted for on the Company’s balance sheet. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market-based pricing models incorporating readily observable market data and requiring judgment and estimates. The Company did not identify any other assets or liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with the accounting guidance. The carrying amounts reported in the balance sheet for cash, accounts payable, accrued expenses, and notes payable approximate their estimated fair market values based on the short-term maturity of the instruments. Stock-based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. The Company estimated the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of the fair value using the option-pricing model is affected by the stock price as well as assumptions regarding the number of highly subjective variables. In June 2018, the FASB issued ASU 2018 - 07, Compensation – Stock Compensation. (Topic 718 ). This update was intended to reduce cost and complexity and to improve financial reporting for share-based payments issues to non-employees (for example, service providers, external legal counsel, suppliers, etc.). The ASU expanded the scope of ASC 718, Compensation - Stock Compensation, which previously only included share-based payments issued to employees, to include share-based payments issues to non-employees for goods and services. Consequently, the accounting for share-based payment to non-employees and employees will be substantially aligned. This standard became effective for the financial statements issues by public companies for the annual and interim periods beginning after December 15, 2018. Management adopted this standard on January 1, 2019. Income Taxes The Company accounts for income taxes pursuant to the provision of ASC 740 - 10, “Accounting for Income Taxes” (“ASC 740 - 10” ) which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach require the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company follows the provision of ASC 740 - 10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740 - 10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold is measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. The Company has adopted ASC 740 - 10 - 25, “Definition of Settlement,” which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed. F- 17 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Leases Effective January 1, 2019, the Company accounts for its leases under ASC 842, Leases . Under this guidance, we determine if an arrangement contains a lease at inception based on whether or not the Company has the right to control the asset during the contract period and other facts and circumstances. Arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the right of use asset and lease liability, the Company has elected to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. Research and Development The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730 - 10, Research and Development (“ASC 730 - 10” ). Under ASC 730 - 10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. For the years ended December 31, 2023 and 2022 , there were no expenditures on research and development. Accumulated Other Comprehensive Income (Loss) Comprehensive income (loss) is comprised of net income (loss) and all changes to the statements of stockholders’ equity. For the Company, comprehensive income (loss) for the years ended December 31, 2023 and 2022 included net income (loss) and unrealized income (losses) from foreign currency translation adjustments. Earnings per Common Share Net income (loss) per common share is calculated in accordance with ASC Topic 260: Earnings per Share (“ASC 260” ). Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding as they would be anti-dilutive. In periods where the Company has a net loss, all dilutive securities are excluded. F- 18 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Related Party Transactions A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party, (see Note 25 ). Recent Accounting Pronouncements Accounting Pronouncements Recently Adopted In August 2023, the FASB issued Accounting Standards Update (“ASU”) 2023 - 04, “Liabilities (Topic 405 ) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121”, to amend and add various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Bulletin No. 121. In July 2023, the FASB issued ASU 2023 - 03, “Presentation of Financial Statement (Topic 205 ), Income Statement - Reporting Comprehensive Income (Topic 220 ), Distinguishing Liabilities from Equity (Topic 480 ), Equity (Topic 505 ), and Compensation - Stock Compensation (Topic 718 )”, to amend various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The Company adopted this conforming guidance upon issuance and the adoption had no material impact on our consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016 - 13, “Financial Instruments – Credit Losses (Topic 326 ) Measurement of Credit Losses on Financial Instruments” (“ASU 2016 - 13” ), which introduces an impairment model based on expected, rather than incurred, losses. Additionally, it requires expanded disclosures regarding (a) credit risk inherent in a portfolio and how management monitors the portfolio’s credit quality; (b) management’s estimate of expected credit losses; and (c) changes in estimates of expected credit losses that have taken place during the period. In November 2018, the FASB issued ASU 2018 - 19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” This ASU clarifies receivables from operating leases are accounted for using the lease guidance and not as financial instruments. In April 2019, the FASB issued ASU 2019 - 04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” This ASU clarifies various scoping and other issues arising from ASU 2016 - 13. In March 2020, the FASB issued ASU 2020 - 03, “Codification Improvements to Financial Instruments.” This ASU improves the Codification and amends the interaction of Topic 842 and Topic 326. ASU 2016 - 13 and related amendments are effective for fiscal years beginning after December 15, 2022, with early adoption permitted. On an ongoing basis, the Company will contemplate forward-looking economic conditions in recording lifetime expected credit losses for the Company’s financial assets measured at cost. Any new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. Accounting Pronouncements Issued but not yet Adopted In December 2023, the FASB issued ASU 2023 - 09, “Income Taxes (Topic 740 )—Improvements to Income Tax Disclosure” (“ASU 2023 - 09” ), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. ASU 2023 - 09 is required to be adopted for annual periods beginning after December 15, 2024, with early adoption permitted. The Company will adopt this accounting standard update effective January 1, 2025. The Company expects that the adoption of the standard will not have a material impact on our consolidated financial statements. In November 2023, the FASB issued ASU 2023 - 07, “Segment Reporting (Topic 280 ) - Improvements to Reportable Segment Disclosures” (“ASU 2023 - 07” ), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. ASU 2023 - 07 is required to be adopted for annual periods beginning after December 15, 2023, and interim period within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company will adopt this accounting standard update effective January 1, 2024. The Company expects that the adoption of the standard will not have a material impact on our consolidated financial statements. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company’s consolidated financial statements. F- 19 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 4. Acquisition On July 1, 2023, the Company, along with Messrs. Fernandez and Barreto, exercised common stock purchase warrants issued by Progressive Care (“RXMD Warrants”) and were issued shares of Progressive Care common stock. The Company exercised RXMD Warrants on a cashless basis and was issued 402,269 shares of Progressive Care common stock. The Company also exercised RXMD Warrants on a cash basis and paid consideration in the amount of $ 506,000 and was issued 230,000 shares of Progressive Care common stock. Mr. Fernandez exercised RXMD Warrants on a cashless basis and was issued 211,470 shares of Progressive Care common stock. Mr. Barreto exercised RXMD Warrants on a cashless basis and was issued 130,571 shares of Progressive Care common stock. At the time of exercise, all of the above RXMD Warrants were in-the-money. After the exercise of the RXMD Warrants, the Company and Messrs. Fernandez and Barreto collectively owned approximately 53 % of Progressive Care’s voting common stock. Also, on July 1, 2023, the Company entered into a voting agreement with Messrs. Fernandez and Barreto, whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs. Fernandez and Barreto agreed to vote all of the shares of Progressive Care common stock (including any new shares of Progressive Care common stock acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Progressive Care common stock) that they own, directly or indirectly, in the same manner that the Company votes its shares of Progressive Care common stock and equivalents. The voting agreement is irrevocable and perpetual in term. As a result of the RXMD Warrant exercises and the entry into the voting agreement, the Company concluded that there was a change in control in Progressive Care. As of July 1, 2023, NextPlat has the right to control more than 50 percent of the voting interests in Progressive Care through the concurrent common stock purchase warrant exercises and voting agreement noted above. Beginning on July 1, 2023, the Company changed the accounting method for its investment in Progressive Care, which prior to July 1, 2023 had been accounted for as an equity method investment to consolidation under the voting interest model in FASB ASC Topic 805. Therefore, Progressive Care became a consolidated subsidiary of the Company on July 1, 2023. Progressive Care contributed revenues of approximately $ 26.8 million and a net loss of approximately $ 14.7 million to the Company for the period from July 1, 2023 to December 31, 2023. The following unaudited pro forma summary presents consolidated information of NextPlat Corp as if the business combination had occurred on January 1, 2023 ( in thousands). For the Twelve Months Ended December 31, 2023 For the Year Ended December 31, 2022 (Unaudited) (Unaudited) Revenue $ 60,704 $ 52,312 Earnings $ ( 15,854 ) $ ( 13,867 ) The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. F- 20 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The following table summarizes the consideration transferred to acquire a controlling interest in Progressive Care and the amounts of identified assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the noncontrolling interest in Progressive Care at the acquisition date (in thousands): Purchase Price Allocation Total purchase consideration $ 16,679 Fair value of non-controlling interest 23,180 Total consideration $ 39,859 Identifiable net assets acquired: Cash $ 7,352 Accounts receivable, net 6,478 Accounts receivable, other 506 Inventory 1,631 Prepaid expenses 220 Property and equipment, net 2,883 Right of use assets, net 405 Intangible assets, net: Trade name 4,700 Development technology 2,880 Pharmacy records 8,130 Deposits 39 Accounts payable and accrued expenses ( 8,231 ) Notes payable and accrued interest - current portion ( 149 ) Lease liabilities - current portion ( 208 ) Notes payable - long term ( 1,173 ) Lease liabilities - long term ( 230 ) Deferred tax liability (1) - Net assets acquired $ 25,233 Goodwill $ 14,626 ( 1 ) Under federal tax law, previously unidentified finite lived intangible assets recognized from a business combination have no tax basis and therefore are not amortized for tax purposes. This tax position created a book/tax basis difference that was previously not recognized at July 1, 2023, the date of the business combination transaction. Therefore, an approximate $ 4.0 million deferred tax liability measurement period adjustment was recorded at December 31, 2023 as a result of the book/tax basis difference for the finite lived intangible assets. In addition the Company determined that the acquired deferred tax liability could be utilized to offset preexisting deferred tax assets. Therefore, in accordance with ASC 805 - 740 - 45 - 2, the Company released the deferred tax asset valuation allowance as a reduction to goodwill in the amount of approximately $ 4.0 million during the measurement period. The total consideration is based on the fair value of the Company’s common stock outstanding at July 1, 2023, which was 7,662,343 total implied shares outstanding and a fair market value of $ 4.45 per share, plus the fair value of warrants and options outstanding at July 1, 2023 of approximately $ 5.8 million. Total implied shares outstanding at July 1, 2023 consisted of 6,162,343 common shares outstanding and 1,500,000 Preferred Stock, Series B as converted on July 1, 2023. As a result of NextPlat obtaining control over Progressive Care, NextPlat’s previously held equity interest in Progressive Care was remeasured to fair value, resulting in a gain of approximately $ 11.4 million , which has been recognized in the line item “Gain on remeasurement of fair value of equity interest in affiliate prior to acquisition” on the condensed consolidated statements of comprehensive income (loss). The fair value of the noncontrolling interest of approximately $ 23.2 million and the fair value of the previously held equity interest of approximately $ 16.7 million in Progressive Care were estimated by applying a market approach and an income approach, respectively. These fair value measurements of the noncontrolling interest and the previously held equity interest are based on significant inputs not observable in the market, and thus represent Level 3 measurements. The fair value estimates for the noncontrolling interest and the previously held equity interest are based on ( 1 ) an assumed discount rate range of 10 % to 11 %, ( 2 ) an assumed terminal value based on long-term sustainable growth rates of 3.0 %,( 3 ) assumed financial multiples of reporting entities deemed to be similar to Progressive Care, and ( 4 ) assumed adjustments because of the lack of control or lack of marketability, as relevant, that market participants would consider when estimating the fair value of the noncontrolling interest and the previously held equity interest in Progressive Care. The goodwill is attributable to the workforce of the acquired business and the significant synergies expected to arise after NextPlat’s acquisition of a controlling interest in Progressive Care. The goodwill is not deductible for tax purposes. The initial recognition of the Progressive Care's identifiable intangible assets, resulting from the acquisition on July 1, 2023 and the application of push-down accounting, were measured using Level 3 inputs. The fair value at the date of acquisition was approximately $ 15.7 million. F- 21 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 5. Fair Value Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: ● Cash, accounts receivable, and accounts payable and accrued liabilities: The amounts reported in the accompanying Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature. ● Notes payable and lease liabilities: The carrying amount of notes payable approximated fair value due to variable interest rates at customary terms and rates the Company could obtain in current financing. The carrying value of lease liabilities approximated fair value due to the implicit rate in the lease in relation to the Company’s borrowing rate and the duration of the leases (Level 2 inputs). F- 22 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 6. Revenue e-Commerce revenue: The Company recognizes revenue from satellite services when earned, as services are rendered or delivered to customers. Equipment sales revenue is recognized when the equipment is delivered to and accepted by the customer. Only equipment sales are subject to warranty. Historically, the Company has not incurred significant expenses for warranties. Equipment sales which have been prepaid, before the goods are shipped are recorded as contract liabilities and once shipped and accepted by the customer is recognized as revenue. The Company also records as contract liabilities, certain annual plans for airtime, which are paid in advance. Once airtime services are incurred, they are recognized as revenue. Unbilled revenue is recognized for airtime plans whereby the customer is invoiced for its data usage the following month after services are incurred. Healthcare revenue: The Company recognizes pharmacy revenue and 340B contract revenue from dispensing prescription drugs at the time the drugs are physically delivered to a customer or when a customer picks up their prescription or purchases merchandise at the store, which is the point in time when control transfers to the customer. Each prescription claim is considered an arrangement with the customer and is a separate performance obligation. Payments are received directly from the customer at the point of sale, or the customers’ insurance provider is billed electronically. For third -party medical insurance and other claims, authorization is obtained to ensure payment from the customer’s insurance provider before the medication is dispensed to the customer. Authorization is obtained for these sales electronically and a corresponding authorization number is issued by the customers’ insurance provider. The Company accrues an estimate of pharmacy benefit manager (“PBM”) fees, including direct and indirect remuneration (“DIR”) fees, which are assessed or expected to be assessed by payers at some point after adjudication of a claim, as a reduction of revenue at the time revenue is recognized. Changes in the estimate of such fees are recorded as an adjustment to revenue when the change becomes known. The Company recognizes COVID- 19 testing revenue when the tests are performed and results are delivered to the customer. Each test is considered an arrangement with the customer and is a separate performance obligation. Payment is generally received in advance from the customer. The following table disaggregates net revenues by categories (in thousands): For the Twelve Months Ended December 31, 2023 e-Commerce Operations Healthcare Operations Total Sales of products, net Prescription revenue, net of PBM fees $ - $ 21,412 $ 21,412 e-Commerce revenue $ 10,977 $ - $ 10,977 Subtotal $ 10,977 $ 21,412 $ 32,389 Revenues from services: Pharmacy 340B contract revenue $ - $ 5,367 $ 5,367 Revenues, net $ 10,977 $ 26,779 $ 37,756 For the Twelve Months Ended December 31, 2022 e-Commerce Operations Healthcare Operations Total Sales of products, net Prescription revenue, net of PBM fees $ - $ - $ - e-Commerce revenue 11,710 - 11,710 Subtotal 11,710 - $ 11,710 Revenues from services: Pharmacy 340B contract revenue - - $ - Revenues, net $ 11,710 $ - $ 11,710 F- 23 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 7. Earnings (Loss) per Share Net income (loss) per common share is calculated in accordance with Accounting Standards Codification (“ASC”) Topic 260: Earnings per Share (“ASC 260” ). Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding as they would be anti-dilutive. In periods where the Company has a net loss, all dilutive securities are excluded. The components of basic and diluted EPS were as follows (in thousands, except per share data): Year Ended December 31, 2023 2022 Net loss attributable to NextPlat Corp common shareholders $ ( 3,778 ) $ ( 9,161 ) Basic weighted average common shares outstanding 17,494 9,592 Potentially dilutive common shares - - Diluted weighted average common shares outstanding 17,494 9,592 Basic weighted average earnings (loss) per common share $ ( 0.22 ) $ ( 0.96 ) Diluted weighted average earnings (loss) per common share $ ( 0.22 ) $ ( 0.96 ) Potentially dilutive common shares excluded from the calculation of diluted weighted average loss per common share: Stock options 136 265 Common stock purchase warrants 675 1,403 811 1,668 F- 24 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 8. Accounts Receivable At December 31, 2023 and 2022 , accounts receivable consisted of the following (in thousands): Year Ended December 31, 2023 2022 Gross accounts receivable – trade $ 9,195 $ 384 Less: allowance for doubtful accounts ( 272 ) - Accounts receivable – trade, net $ 8,923 $ 384 Bad debt expense was approximately $ 47,000 and $ 0 for the twelve months ended December 31, 2023 and 2022 , respectively. The increase in accounts receivable was attributable to the consolidation of Progressive Care at July 1, 2023. Note 9. Accounts Receivable - Other, net At December 31, 2023 and 2022 , accounts receivable - other, net consisted of the following (in thousands): Year Ended December 31, 2023 2022 Performance bonuses $ 1,602 $ - Customers 192 - Other 52 - $ 1,846 $ - Performance bonuses, paid annually by PBMs, are estimated based on historical pharmacy performance and prior payments received. Other receivables are loans to employees. The increase in accounts receivable - other was attributable to the consolidation of Progressive Care at July 1, 2023. Note 10. Inventory At December 31, 2023 and 2022 , inventories consisted of the following (in thousands): December 31, 2023 December 31, 2022 Finished goods $ 5,195 $ 1,287 Less reserve for obsolete inventory ( 60 ) - Total $ 5,135 $ 1,287 The increase in inventory was attributable to the consolidation of Progressive Care as of July 1, 2023. F- 25 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 11. VAT Receivable On January 1, 2021, VAT rules relating to imports and exports between the UK and EU changed as a result of the UK’s departure from the EU. As of December 31, 2023 and 2022 , the Company recorded a receivable in the amount of approximately $ 342,000 and $433,000 , respectively, for amounts available to reclaim against the tax liability from UK and EU countries. Note 12. Prepaid Expenses Prepaid expenses current and long term amounted to approximately $ 640,000 and $ 61,000 , respectively at December 31, 2023 , as compared to $46,000 and $49,000 , respectively at December 31, 2022 . Prepaid expenses include prepayments in cash for accounting fees, public company expenses, insurance, which are being amortized over the terms of their respective agreements, as well as cost associated with certain contract liabilities. The current portion consists of costs paid for future services which will occur within a year. The increase in prepaid expenses was attributable to the consolidation of Progressive Care as of July 1, 2023. Note 13. Property and Equipment, net Property and equipment consisted of the following (in thousands): December 31, 2023 December 31, 2022 Building $ 2,116 $ - Vehicles 595 - Office furniture and fixtures 527 128 Land 184 - Leasehold improvements 124 48 Computer equipment 117 72 Rental equipment 60 38 Appliques 2,160 2,160 Website development 587 665 Construction in progress 22 - Property and equipment gross 6,492 3,111 Less: accumulated depreciation ( 2,503 ) ( 1,865 ) Property and equipment, net $ 3,989 $ 1,246 Depreciation expense was approximately $ 758,000 and $ 465,000 for the twelve months ended December 31, 2023 and 2022 , respectively. The increase in property and equipment was attributable to the consolidation of Progressive Care as of July 1, 2023. F- 26 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 14. Goodwill and Intangible Assets, net Goodwill The following table reflects changes in the carrying amount of goodwill during the periods presented by reportable segments (in thousands): e-Commerce Operations Healthcare Operations Total Balances as of December 31, 2021 Goodwill $ - $ - $ - Accumulated impairment losses - - - Goodwill, net as of December 31, 2021 - - - Changes in Goodwill during the year ended December 31, 2022: Goodwill acquired - - - Impairment losses - - - Balances as of December 31, 2022 Goodwill - - - Accumulated impairment losses - - - Goodwill, net as of December 31, 2022 - - - Changes in Goodwill during the year ended December 31, 2023: Goodwill acquired - 14,626 14,626 Impairment losses - ( 13,895 ) ( 13,895 ) Balances as of December 31, 2023 Goodwill - 14,626 14,626 Accumulated impairment losses - ( 13,895 ) ( 13,895 ) Goodwill, net as of December 31, 2023 $ - $ 731 $ 731 1. Increase related to book tax difference of intangible assets arising from the business combination without transfer of consideration. The initial recognition of goodwill resulting from the acquisition of Progressive Care on July 1, 2023. The Company performed an annual impairment test for goodwill as of December 31, 2023. The Company performed an annual impairment test as of December 31, 2023, for our healthcare operations reporting segments. The fair value of each reporting unit was estimated using the income valuation approach. The income approach applied a fair value methodology to each reporting unit based on discounted cash flows. The various inputs to this fair value model are considered Level 3. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internally-developed forecasts of revenue and profitability, estimation of the long-term rate of growth for the business, estimation of the useful life over which cash flows will occur, and determination of the weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used in the impairment test ranged from 11% to 13.5%. As a result of the 2023 annual impairment test, the Company concluded that the carrying amount of the Pharmacy Operations reporting unit goodwill exceeded its fair value by 95% and recorded a non-cash goodwill impairment charge of approximately $ 13.9 million for the year ended December 31, 2023. This was included in goodwill impairment charge on the Consolidated Statements of Operations for the year ended December 31, 2023. F- 27 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Intangible Assets Intangible assets, net consisted of the following (in thousands): December 31, 2023 Gross amount Accumulated amortization Net Amount Pharmacy records $ 8,130 $ ( 807 ) $ 7,323 Trade names 4,700 ( 224 ) 4,476 Developed technology 2,880 ( 281 ) 2,599 Customer Contracts 250 ( 225 ) 25 Total intangible assets $ 15,960 $ ( 1,537 ) $ 14,423 December 31, 2022 Gross amount Accumulated amortization Net Amount Pharmacy records $ - $ - $ - Trade names - - - Developed technology - - - Customer Contracts 250 ( 200 ) 50 Total intangible assets $ 250 $ ( 200 ) $ 50 Amortization of pharmacy records, trade names, developed technology, and customer contracts is included in depreciation and amortization in the accompanying Consolidated Statements of Comprehensive Income Loss. For the twelve months ended December 31, 2023 and 2022 , the Company recognized amortization expense of approximately $ 1.3 million and $ 25,000 , respectively. Future amortization of intangible assets is as follows (in thousands): 2024 $ 2,721 2025 2,672 2026 2,672 2027 2,672 2028 1,571 Thereafter 2,115 Total $ 14,423 F- 28 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 15. Equity Method Investment On August 30, 2022, NextPlat entered into a Securities Purchase Agreement (the “SPA”) between NextPlat and Progressive Care, under which NextPlat, its Executive Chairman and Chief Executive Officer, Charles M. Fernandez, board member, Rodney Barreto, and certain other investors invested an aggregate of $ 8.3 million into Progressive Care. In connection with the SPA, NextPlat purchased 3,000 newly issued Units of Progressive Care valued at $ 6 million, with each Unit comprised of one share of Progressive Care’s Series B Convertible Preferred Stock, $ 0.001 par value, and one Investor Warrant to purchase a share of Progressive Care Series B Convertible Preferred Stock at an exercise price of $ 2,000 The Investor Warrants may also be exercised, in whole or in part, by means of a cashless exercise. The Progressive Care Series B Convertible Preferred Stock has a stated value of $ 2,000 per share and each share has the equivalent voting rights of 500 shares of Progressive Care common stock (after giving effect to the Reverse Stock Split described below). Each share of Progressive Care Series B Convertible Preferred Stock is convertible at any time at the option of the holder into shares of Progressive Care common stock determined by dividing the stated value by the conversion price which is $ 4.00 (after giving effect to the Reverse Stock Split described below). Also, pursuant to the SPA, Messrs. Fernandez and Barreto were nominated for election to Progressive Care’s Board of Directors. In addition, on August 30, 2022, NextPlat Corp, Messrs. Fernandez and Barreto, and certain other investors (collectively, the “NextPlat Investors”) entered into a Modification Agreement wherein the terms were modified for an existing Secured Convertible Promissory Note (the “Note”) originally held by a third party note holder and sold to the NextPlat Investors. The NextPlat Investors purchased the Note as part of a Confidential Note Purchase and Release Agreement between the former note holder and the NextPlat Investors. As of the date of the SPA, the aggregate amount of principal and interest outstanding on the Note was approximately $ 2.8 million. As part of the Modification Agreement, various terms of the Note were modified, among them, the Conversion Price for the Note was modified to a fixed price of $ 4.00 per share of common stock (after giving effect to the Reverse Stock Split described below). In addition, the Note was modified to provide for mandatory conversion upon the later to occur of (a) the completion of the Company’s reverse stock split, and (b) the listing of the Company’s common stock on a national exchange, including the Nasdaq Capital Market, the Nasdaq Global Market, or the New York Stock Exchange. On September 13, 2022, the Progressive Care Board of Directors appointed Charles M. Fernandez as Chairman of the Board of Directors and Rodney Barreto as the Vice Chairman of the Board of Directors. In connection with these appointments, Alan Jay Weisberg, Progressive Care’s current Chairman and Chief Executive Officer, was appointed to serve as a Vice Chairman. On September 12, 2022, two of Progressive Care’s Directors, Birute Norkute and Oleg Firer, resigned as Directors. On October 7, 2022, the Progressive Care Board of Directors unanimously voted to approve the appointment of Pedro Rodriguez, MD to the Board. Dr. Rodriguez was nominated to the Progressive Care Board by NextPlat. On November 11, 2022, Mr. Weisberg resigned from his positions as Progressive Care’s Chief Executive Officer and co-Vice-Chairman of the Board of Directors. On the same date, the Board appointed Mr. Fernandez to serve as the new Chief Executive Officer immediately. On December 29, 2022, Progressive Care filed a Certificate of Amendment to Articles of Incorporation (the “Amendment to Articles”) with the Secretary of State of the State of Delaware. Pursuant to the Amendment to Articles, each 200 shares of Progressive Care’s common stock outstanding was converted into one share of common stock (the “Reverse Stock Split”) and the number of shares of common stock that Progressive Care is authorized to issue was reduced to 100 million (the “Reduction in Authorized Stock”). The Reverse Stock Split and the Reduction in Authorized Stock were approved by the Progressive Care Board of Directors and the shareholders. On May 5, 2023, NextPlat entered into a Securities Purchase Agreement (the “SPA”) with Progressive Care, pursuant to which the Company purchased 455,000 newly issued units of securities from Progressive Care (the “Units”) at a price per Unit of $ 2.20 for an aggregate purchase price of $ 1 million (the “Unit Purchase”). Each Unit consisted of one share of common stock, par value $ 0.0001 per share, of Progressive Care (“Common Stock”) and one warrant to purchase a share of Common Stock (the “PIPE Warrants”). The PIPE Warrants have a three -year term and are immediately exercisable at $ 2.20 per share of Common Stock. On May 9, 2023, NextPlat and Progressive Care closed the transactions contemplated in the SPA. Simultaneous with the closing of the Unit Purchase on May 9, 2023, Progressive Care entered into a Debt Conversion Agreement (the “DCA”) with NextPlat and the other holders (the “Holders”) of that certain Amended and Restated Secured Convertible Promissory Note, dated as of September 2, 2022, made by Progressive Care in the original face amount of approximately $ 2.8 million (the “Note”). Pursuant to the DCA, NextPlat and the other Holders agreed to convert the total approximately $ 2.9 million of outstanding principal and accrued and unpaid interest to Common Stock at a conversion price of $ 2.20 per share. NextPlat received 570,599 shares issued upon conversion of the Note. In addition, NextPlat received a warrant to purchase one share of Common Stock for each share of Common Stock they received upon conversion of the Note (the “Conversion Warrants”). The Conversion Warrants have a three -year term and are immediately exercisable at $ 2.20 per share of Common Stock. At the same time, Progressive Care and NextPlat entered into a First Amendment (the “Amendment”) to that certain Securities Purchase Agreement dated November 16, 2022 ( the “Debenture Purchase Agreement”). Under the Debenture Purchase Agreement, Progressive Care agreed to issue, and NextPlat Corp agreed to purchase, from time to time during the three -year term of the Debenture Purchase Agreement, up to an aggregate of $ 10 million of secured convertible debentures from Progressive Care (the “Debentures”). Pursuant to the Amendment, NextPlat and Progressive Care agreed to amend the Debenture Purchase Agreement and the form of Debenture to have a conversion price of $ 2.20 per share. At present, no Debentures have been purchased by NextPlat under the Debenture Purchase Agreement. As a result of the common stock purchase warrant exercises and the entry into the voting agreement as described in Note 4, NextPlat concluded that there was a change in control in Progressive Care. As of July 1, 2023, NextPlat has the right to control more than 50 percent of the voting interests in Progressive Care through the concurrent common stock purchase warrant exercises and voting agreement. Beginning on July 1, 2023, the Company changed the accounting method for its investment in Progressive Care, which prior to July 1, 2023 had been accounted for as an equity method investment, to consolidation under the voting interest model in FASB ASC Topic 805. Therefore, Progressive Care became a consolidated subsidiary of the Company on July 1, 2023. F- 29 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The following summarizes the Company’s consolidated balance sheet description equity method investment as follows as of December 31, 2023 (in thousands): Carrying Amount December 31, 2022, beginning balance $ 5,261 Investment in Progressive Care Inc. and Subsidiaries 1,506 Gain on equity method investment 11,352 Portion of loss from Progressive Care, Inc. and Subsidiaries ( 1,604 ) Depreciation expense due to cost basis difference (1) ( 49 ) Interest earned from convertible note receivable 21 Interest earned from amortization of premium on convertible note receivable 199 Elimination of intercompany interest earned ( 7 ) Change in accounting method as of July 1, 2023 ( 16,679 ) December 31, 2023, carrying amount $ - The following summarizes the Company’s consolidated statements of operations and comprehensive loss description equity in net loss of affiliate for the year ended December 31, 2023 as follows (in thousands): For the Year Ended December 31, 2023 Portion of loss from Progressive Care, Inc. and Subsidiaries $ ( 1,604 ) Depreciation expense due to cost basis difference (1) ( 49 ) Interest earned from convertible note receivable 21 Interest earned from amortization of premium on convertible note receivable 199 Elimination of intercompany interest earned ( 7 ) Equity in net loss of affiliate $ ( 1,440 ) ( 1 ) NextPlat records depreciation expense on its estimated cost basis difference which is subject to change Note 16. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following (in thousands): December 31, 2023 December 31, 2022 Accounts payable $ 12,142 $ 1,200 Accrued wages and payroll liabilities 200 23 Accrued PBM fees 571 - Customer deposits payable 76 86 Accrued legal fees - 85 Pre-merger accrued other liabilities - 88 Accrued other liabilities 187 41 Total $ 13,176 $ 1,523 The increase in accounts payable and accrued expenses was attributable to the consolidation of Progressive Care at July 1, 2023. F- 30 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 17. Notes Payable Notes payable consisted of the following (in thousands): December 31, 2023 December 31, 2022 A. Mortgage note payable - commercial bank - collateralized $ 1,140 $ - B. Note payable - uncollateralized 25 - C. Notes payable - collateralized 255 216 Insurance premiums financing 103 - Subtotal 1,523 216 Less: current portion of notes payable ( 312 ) ( 60 ) Long-term portion of notes payable $ 1,211 $ 156 (A) Mortgage Note Payable – collateralized In 2018, Progressive Care closed on the purchase of land and building located at 400 Ansin Boulevard, Hallandale Beach, Florida. The purchase price was financed in part through a mortgage note and security agreement entered into with a commercial lender in the amount of $ 1,530,000 . The promissory note is collateralized by the land and building, bears interest at a fixed rate of 4.75 % per annum, matures on December 14, 2028 and is subject to a prepayment penalty. Principal and interest will be repaid through 119 regular payments of $ 11,901 that began in January 2019, with the final payment of all principal and accrued interest not yet paid on December 14, 2028. Note repayment is guaranteed by Progressive Care Inc. (B) Note Payable – Uncollateralized As of December 31, 2023 the uncollateralized note payable represents a non-interest-bearing loan that is due on demand from an investor. (C) Notes Payable – Collateralized On July 16, 2020 ( the “Issue Date”), GTC, entered into a Coronavirus Interruption Loan Agreement (“Debenture”) by and among the Company and HSBC UK Bank PLC (the “Lender”) for an amount of £250,000, or USD $ 338,343 at an exchange rate of GBP: USD of 1.3533720 . The Debenture bears interest beginning July 16, 2021, at a rate of 4.0 % per annum over the Bank of England Base Rate ( 0.1 % as of July 16, 2020), payable monthly on the outstanding principal amount of the Debenture. The Debenture has a term of 6 years from the date of drawdown, July 15, 2026, the “Maturity Date”. The first repayment of £4,166.67 (exclusive of interest) was made 13 month(s) after July 16, 2020. Voluntary prepayments are allowed with 5 business days’ written notice and the amount of the prepayment is equal to 10 % or more of the limit or, if less, the balance of the debenture. The Debenture is secured by all GTC’s assets as well as a guarantee by the UK government. The proceeds from the Debenture were used for general corporate and working capital purposes. The Debenture includes customary events of default, including, among others: (i) non-payment of amounts due thereunder, (ii) non-compliance with covenants thereunder, (iii) bankruptcy or insolvency (each, an “Event of Default”). Upon the occurrence of an Event of Default, the Debenture becomes payable upon demand. The balance outstanding as of December 31, 2023 on the note payable was approximately $ 165,000 . In April 2021, Progressive Care entered into a note obligation with a commercial lender, the proceeds from which were used to purchase pharmacy equipment in the amount of approximately $ 30,000 . During September 2021, pharmacy equipment was returned since the installation was cancelled and the note was amended. The amended promissory note payable requires 46 monthly payments of $ 331 , including interest at 6.9 %. The balance outstanding as of December 31, 2023 on the note payable was approximately $ 6,000 . In July 2022, Progressive Care entered into a note obligation with a commercial lender, the proceeds from which were used to purchase pharmacy equipment in the amount of approximately $ 90,000 . The terms of the promissory note payable require 60 monthly payments of $ 1,859 , including interest at 8.78 % starting January 2023. The balance outstanding on the note payable was approximately $ 71,000 as of December 31, 2023 . In September 2022, Progressive Care entered into a note obligation with a commercial lender, the proceeds from which were used to purchase a vehicle in the amount of approximately $ 25,000 . The terms of the promissory note payable require 24 monthly payments of $ 1,143 , including interest at 8.29 % starting October 2022. The balance outstanding on the note payable was approximately $ 10,000 as of December 31, 2023 . Principal outstanding as of December 31, 2023 , is expected to be repayable as follows (in thousands): Year Amount 2024 $ 312 2025 215 2026 119 2027 124 2028 753 Thereafter — Total $ 1,523 F- 31 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 18. Equity Preferred Stock We have authorized 3,333,333 shares of $ 0.0001 par value of preferred stock. No preferred stock was outstanding for any year presented. Common Stock We have authorized 50,000,000 shares of $ 0.0001 par value common stock. As of December 31, 2023 and 2022 , 18,724,596 and 14,402,025 shares, respectively, were issued and outstanding. Capital Structure On May 28, 2021, the Company effected a reverse stock split of its common stock at a ratio of 1 -for- 5 (the “Reverse Split”). No fractional shares of common stock were issued as a result of the Reverse Split. Stockholders of record who were otherwise entitled to receive a fractional share received a whole share. The conversion or exercise prices of Company’s issued and outstanding convertible securities, stock options and warrants were adjusted accordingly. All information presented, assumes a 1 -for- 5 reverse stock split of Company’s outstanding shares of common stock, and unless otherwise indicated, all such amounts and corresponding conversion price or exercise price data set forth have been adjusted to give effect to such assumed reverse stock split. Listing on the Nasdaq Capital Market Our common stock and warrants have been trading on the Nasdaq Capital Market under the symbols “NXPL” and “NXPLW,” respectively, since January 21, 2022. Prior to January 21, 2022, our common stock and warrants were traded on the Nasdaq Capital Market under the symbols “OSAT” and “OSATW,” respectively. April 2023 Private Placement of Common Stock On April 5, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale by the Company in a private placement of 3,428,571 shares of the Company’s common stock, $ 0.0001 par value per share (the “Common Stock”). The offering price of the Common Stock was $ 1.75 per share, the closing price of the Common Stock on April 4, 2023. On April 11, 2023, the Private Placement closed. Upon the closing of the Private Placement, the Company received gross proceeds of approximately $ 6.0 million. The Company sold the Common Stock to the Investor in reliance on the exemption from registration afforded by Section 4 (a)( 2 ) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws. The Investor represented that it is acquiring the Common Stock for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. Accordingly, the Common Stock has not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws. December 2022 Private Placement of Common Stock ( “ December Offering ” ) On December 9, 2022, the Company entered into a securities purchase agreement with certain institutional and accredited investors for the sale by the Company in a private placement of 4,575,429 units, each unit comprising (i) one share of the Company’s common stock, and (ii) one warrant to purchase one share of common stock. The offering price of the units was $ 1.75 per unit. The warrants included in the units are exercisable at a price of $ 1.75 per share and expire three years from the date of issuance. The offering closed on December 14, 2022, and the Company received gross proceeds of approximately $ 8.0 million for the units. The Company intends to use the proceeds from the offering for working capital needs, potential acquisitions, joint ventures, and ongoing business transition activities. On December 9, 2022, the Company entered into placement agency agreement (the “Placement Agency Agreement”) with Dawson James Securities, Inc. (“Dawson James”) pursuant to which Dawson James agreed to serve as lead or managing placement agent on a best efforts, agency basis in connection with the private placement of the Units. The Company has agreed to pay Dawson James a placement agent fee of 6 % of the gross proceeds received in the private placement and 3 % on all proceeds from officers and directors including any directed orders from the Company. As additional compensation under the Placement Agency Agreement, the Company will issue Dawson James warrants (the “Placement Agent Warrants”) to purchase up to 549,051 shares of Common Stock with an exercise price of $ 1.75 per share. The Placement Agent Warrants are exercisable at any time and from time to time during the three -year period commencing on the six month anniversary of the closing date. January 2022 Private Placement of Common Stock ( “ January Offering ” ) On January 2, 2022, the Company finalized and closed a securities purchase agreement (the “Purchase Agreement”) in connection with the sale in a private placement by the Company of 2,229,950 shares of the Company’s common stock The purchase price for the common stock sold in the offering was $ 3.24 per share. The Company received gross proceeds from the sale of the common stock of $ 7,225,038 . Legal and registration fees amounted to $ 220,000 , resulting in net proceeds of approximately $ 7.0 million. Prior to the private placement close, proceeds of approximately $ 1.4 million, were received and recorded as a stock subscription payable, for the year ended December 31, 2022 . The Company intended to use the proceeds from the offering for general corporate purposes, including potential acquisitions and joint ventures. Approximately 73 % of funds raised were secured from existing shareholders and from the members of the Company’s senior management and Board of Directors. F- 32 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 19. Warrants Underwriter Warrants In addition to, but separate from, the registered warrants included in the units sold in the June Offering, the Company issued 144,000 warrants to Maxim Group LLC, the underwriter (the “Underwriter Warrants”) in connection with the June Offering. The Underwriter Warrants expire five years from the effective date of the June Offering and are exercisable at a per share price equal to $ 5.50 per share, or 110 % of the public offering price per unit in the June Offering. As of December 31, 2023 and 2022 , there were 144,000 and 144,000 Underwriter Warrants issued and outstanding, respectively. Placement Agent Warrants On December 9, 2022, pursuant to the December Offering, the Company issued warrants to purchase 4,575,429 shares of common stock in an offering, at an exercise price of $ 1.75 and a term of 3 years. In addition to, but separate from, the unregistered warrants included in the units sold in the December Offering, the Company issued 549,051 warrants to purchase shares of Common Stock with an exercise price of $ 1.75 per share, to its Placement Agent Dawson James Securities Inc. The Placement Agent Warrants are exercisable at any time and from time to time during the three -year period commencing on the six -month anniversary of the closing date. As of December 31, 2023 and 2022 , there were 549,051 and 549,051 Placement Agent Warrants issued and outstanding, respectively. Stock Based Compensation Warrants For the year ended December 31, 2023 , the Company granted warrants as stock based compensations valued at approximately $ 1.60 per warrant, using a Black-Scholes option pricing model with the following assumptions: stock price of $ 1.60 per share (based on closing price of the Company’s common stock on the date of grant), volatility of 507 %, expected term of 3 years and a risk free interest rate of 4.47 %. As of December 31, 2023 and 2022 , there were 20,000 and 0 Stock Based Compensation Warrants issued and outstanding, respectively. A summary of the status of the Company’s total outstanding warrants and changes during the year ended December 31, 2023 is as follows: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Balance at January 1, 2022 2,530,092 $ 5.00 4.42 Granted 5,124,480 1.75 3.05 Exercised - - - Forfeited - - - Cancelled - - - Balance outstanding and exercisable at December 31, 2022 7,654,572 $ 2.83 3.15 Balance at January 1, 2023 7,654,572 $ 2.83 3.15 Granted 20,000 1.65 3.00 Exercised ( 105,000 ) 1.75 - Forfeited - - - Cancelled - - - Balance outstanding and exercisable at December 31, 2023 7,569,572 $ 2.85 2.15 As of December 31, 2023 , and December 31, 2022 , there were 7,569,572 and 7,654,572 warrants outstanding, respectively. As of December 31, 2022 , the Company had registered warrants of 2,386,092 of the 7,654,572 warrants issued and outstanding. As of December 31, 2023 , the Company had registered warrants of 2,386,092 of the 7,569,572 warrants issued and outstanding. The Company determined that the warrants do not meet the definition of liability under FASB ASC Topic 480 and therefore classified the warrants as equity instruments. F- 33 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 20. Stock-Based compensation For the years ended December 31, 2023 and 2022 , stock-based compensation expense recognized in SG&A expenses was approximately $ 5.4 million and $ 3.0 million, respectively. Stock Award Plans The Company maintains stock incentive plans to attract, motivate and retain management, key employees, directors, and consultants. These plans provide for discretionary awards of, among others, stock options, stock awards, stock unit awards, and stock appreciation rights to participants (collectively, share-based awards). Restricted Stock Awards The following table summarizes our restricted stock awards activity: Number of Units Weighted Average Grant Date Fair Value Outstanding as of December 31, 2021 867,500 $ 4.20 Granted 136,000 2.72 Vested ( 543,500 ) 3.78 Forfeited - - Outstanding as of December 31, 2022 460,000 4.32 Granted 559,000 1.65 Vested ( 794,000 ) 2.42 Forfeited - - Outstanding as of December 31, 2023 225,000 $ 4.33 As of December 31, 2022 , there was approximately $ 2.3 million of net unrecognized compensation cost related to unvested stock-based compensation to be recognized over the remaining weighted average period of 1.40 years. As of December 31, 2023 , there was approximately $ 1.1 million of net unrecognized compensation cost related to unvested stock-based compensation to be recognized over the remaining weighted average period of 1.58 years. Stock Options Stock options outstanding at December 31, 2023 and 2022 , as disclosed in the below table, have approximately ($ 4.4 million) and ($ 6.1 million) of intrinsic value, respectively. A summary of the status of the Company’s outstanding stock options and changes during the years ended December 31, 2023 and 2022 , is as follows: Number of Options Weighted Average Exercise Price Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Life (Years) Balance at January 1, 2022 2,179,892 $ 4.54 $ 2.44 5.93 Granted 190,000 $ 1.92 $ 1.43 6.85 Exercised - $ - $ - - Cancelled ( 250,000 ) $ 5.35 $ - - Expired ( 191 ) $ - $ - - Balance outstanding at December 31, 2022 2,119,701 $ 4.16 $ 2.25 5.23 Options exercisable at December 31, 2022 1,259,701 $ 3.51 $ 1.68 6.25 Balance at January 1, 2023 2,119,701 $ 4.16 $ 2.25 5.23 Granted 395,000 $ 2.37 $ 2.37 4.06 Exercised - $ - $ - - Cancelled ( 266,284 ) $ 5.88 $ - - Expired ( 3,084 ) $ - $ - - Balance outstanding at December 31, 2023 2,245,333 $ 3.63 $ 2.88 4.26 Options exercisable at December 31, 2023 1,771,997 $ 3.31 $ 2.86 4.63 For the year ended December 31, 2022 , the Company granted 190,000 stock options valued at approximately $ 1.10 - $ 1.92 per option, using a Black-Scholes option pricing model with the following assumptions: stock price of $ 1.71 - $ 2.20 per share (based on closing price of the Company’s common stock on the date of grant), volatility of 75 % - 100 %, expected term of 5 to 10 years and a risk free interest rate of 2.66 % to 4.39 %. For the year ended December 31, 2023 , the Company granted 395,000 stock options valued at approximately $ 1.98 -$ 2.64 per option, using a Black-Scholes option pricing model with the following assumptions: stock price of $ 1.98 -$ 2.64 per share (based on closing price of the Company’s common stock on the date of grant), volatility of 502 %- 504 %, expected term of 2 - 5 years, and a risk free interest rate of 3.31 %- 3.71 %. As of December 31, 2022 , there was approximately $ 1.4 million of net unrecognized compensation cost related to unvested stock options to be recognized over the remaining weighted average period of 3.73 years. As of December 31, 2023 , there was approximately $ 1.4 million of net unrecognized compensation cost related to unvested stock options to be recognized over the remaining weighted average period of 2.88 years. F- 34 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 21. Income Taxes The Company accounts for income taxes under ASC Topic 740: Income Taxes which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards. ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. The tax reform bill that Congress voted to approve December 20, 2017, also known as the “Tax Cuts and Jobs Act”, made sweeping modifications to the Internal Revenue Code, including a much lower corporate tax rate, changes to credits and deductions, and a move to a territorial system for corporations that have overseas earnings. The act replaced the prior-law graduated corporate tax rate, which taxed income over $10.0 million at 35%, with a flat rate of 21%. Due to the continuing loss position of the Company, such changes should not be material. For U.S. purposes, the Company has not completed its evaluation of NOL utilization limitations under Internal Revenue Code, as amended (the “Code”) Section 382, change of ownership rules. If the Company has had a change in ownership, the NOL’s would be limited as to the amount that could be utilized each year, or possibly eliminated, based on the Code. The Company has also, not completed its review of NOL’s pertaining to years the Company was known as “Silver Horn Mining Ltd.” and “Great West Resources, Inc.”, which may not be available due to IRC Section 382 and because of a change in business line that may eliminate NOL’s associated with ““Silver Horn Mining Ltd.” and “Great West Resources, Inc.” The company has also not reviewed the impact relating to “Recent Events” for its IRC Section 382 possible NOL’s limitation. The components of earnings before income taxes for the years ended December 31, 2023 and 2022 were as follows (in thousands): Year Ended December 31, 2023 2022 Net loss after loss in equity method investment and before income taxes: Domestic $ ( 12,672 ) $ ( 9,436 ) Foreign 293 362 $ ( 12,379 ) $ ( 9,074 ) Income tax provision (benefit) consists of the following for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 Income tax (benefit) provision: Current Federal $ ( 11 ) $ - State - - Foreign 39 87 Total current 28 87 Deferred: Federal - - State - - Foreign - - Total deferred - - Total income tax (benefit) provision $ 28 $ 87 The Company’s wholly owned subsidiary, GTC, is a United Kingdom (“UK”) Limited Company and files tax returns in the UK. Its estimated tax liability for December 31, 2023 and 2022 is approximately $ 60,000 and $ 87,000 , respectively. Progressive Care's estimated tax liability for December 31, 2023 is approximately $ 0 . F- 35 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) A reconciliation of the income tax provision (benefit) by applying the statutory United States federal income tax rate to income (loss) before income taxes is as follows (in thousands): Year Ended December 31, 2023 2022 Federal income tax (benefit) provision at statutory rate $ ( 2,655 ) $ ( 1,984 ) State tax expense net of federal tax benefit - ( 411 ) State tax expense federal impact - 45 Provision true-up adjustments ( 488 ) - State rate change adjustment - ( 214 ) Foreign taxes at rate different than US Taxes 60 87 Net operating loss deduction ( 310 ) - Permanent differences ( 22 ) - Other true-ups 99 106 Change in valuation allowance 3,344 2,458 Income tax (benefit) provision $ 28 $ 87 Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset is as follows (in thousands): December 31, 2023 December 31, 2022 Deferred tax assets: Net operating loss carryforward $ 8,016 $ 3,658 Property plant and equipment and intangibles asset 327 130 Equity method investment loss 806 441 Other tax carry-overs 613 - Reserves and allowances 85 - Stock-based compensation 3,861 1,949 Total deferred tax assets $ 13,708 $ 6,178 Deferred tax liabilities: Book basis of intangible assets in excess of tax basis $ 3,650 $ - Total deferred tax liabilities $ 3,650 $ - Net deferred tax asset before valuation allowance $ 10,058 $ 6,178 Less: valuation allowance ( 10,058 ) ( 6,178 ) Net deferred tax asset $ - $ - Nextplat Corp's net operating loss carryforward increased from approximately $ 14.8 million at December 31, 2022 to $ 17.8 million at December 31, 2023 . After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2023 and 2022 , due to the uncertainty of realizing the deferred income tax assets. The change in the valuation allowance for 2023 was approximately $ 2.2 million. Out of the approximately $17.8 million net operating losses carry forward, approximately $ 2.9 million will begin to expire in 2036 and approximately $ 14.9 million will have an indefinite life. Progressive Care's net operating loss carryforward decreased from approximately $ 14.4 million at December 31, 2022 to $ 14.1 million at December 31, 2023. After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2023 and 2022, due to the uncertainty of realizing the deferred income tax assets. The change in the valuation allowance for 2023 was an increase of approximately $ 1.7 million, exclusive of the approximate $ 4.0 million reversal of the valuation allowance attributable to the business combination. Out of the approximately $13.8 million net operating losses carry forward, approximately $ 2.8 million will begin to expire in 2032 and approximately $ 11.0 million will have an indefinite life. F- 36 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The Internal Revenue Code includes a provision, referred to as Global Intangible Low-Taxed Income (“GILTI”), which provides for a 10.5% tax on certain income of controlled foreign corporations. We have elected to account for GILTI as a period cost if and when occurred, rather than recognizing deferred taxes for basis differences expected to reverse. The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. U.S. federal income tax returns for 2020 and after remain open to examination. We and our subsidiaries are also subject to income tax in multiple states and foreign jurisdictions. Generally, foreign income tax returns after 2019 remain open to examination. No income tax returns are currently under examination. As of December 31, 2023 and 2022 , the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes. The Company recognizes penalties and interest related to unrecognized tax benefits as income tax expense. For the years ended December 31, 2023 and 2022 , there were no penalties or interest recorded in income tax expense. Note 22. Leases The Company has entered into a number of lease arrangements under which the Company is the lessee. These leases are classified as operating leases. In addition, the Company has elected the short-term lease practical expedient in ASC Topic 842 related to real estate leases with terms of one year. The following is a summary of the Company’s lease arrangements. Finance Lease Agreements In May 2018, Progressive Care entered into a finance lease obligation to purchase pharmacy equipment with a cost of approximately $ 115,000 . The terms of the lease agreement require monthly payments of approximately $ 1,700 plus applicable tax over 84 months ending March 2025 including interest at the rate of 6 %. In December 2020, Progressive Care entered into an interest-free finance lease obligation to purchase computer servers with a cost of approximately $ 51,000 . The terms of the lease agreement require monthly payments of approximately $ 1,400 plus applicable tax over 36 months ending November 2023. Operating Lease Agreements On December 2, 2021, Nextplat entered into a 62 -month lease for 4,141 square feet of office space in Florida ("Florida lease"), for approximately $ 186,000 annually. The rent increases 3 % annually. The lease commenced upon occupancy on June 13, 2022, and will expire on August 31, 2027. The Florida lease does not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. For our facilities in Poole, England, we rent office and warehouse space of approximately 2,660 square feet for £30,000 annually or approximately USD $ 37,100 , based on a yearly average exchange rate of 1.24 GBP: USD. The Poole lease was renewed on October 6, 2022, and expired October 31, 2023 and renewed for an additional twelve months. Progressive Care entered into a lease agreement for its Orlando pharmacy in August 2020. The term of the lease is 66 months with a termination date of February 2026. The lease agreement calls for monthly payments that began in February 2021, of $ 4,310 , with an escalating payment schedule each year thereafter. Progressive Care leases its North Miami Beach pharmacy location under an operating lease agreement with a lease commencement date in September 2021. The term of the lease is 60 months with a termination date in August 2026. The lease calls for monthly payments of $ 5,237 , with an escalating payment schedule each year thereafter. Progressive Care also leases its Palm Beach County pharmacy locations under operating lease agreements expiring in February 2024. During June 2023 Nextplat entered into a 36 -months lease to le ase twenty-five ( 25 ) hours in a Phenom 300 aircraft, for approximately $ 200,650 annually. The rent increases 3 % annually. The lease commenced on June 7, 2023, and will expire on June 6, 2026. Variable expenses generally represent the Company’s share of the landlord’s operating expenses. Right of use assets for operating leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic 360 - 10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. As of December 31, 2023 and 2022 , we have not recognized any impairment losses for our ROU assets. We monitor for events or changes in circumstances that require a reassessment of one of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss. F- 37 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) We recognized lease costs associated with all leases as follows (in thousands): For the Year Ended December 31, 2023 2022 Operating lease cost: Fixed rent expense $ 427 $ 101 Variable rent expense 111 - Finance lease cost: Amortization of right-of-use assets 15 - Interest expense 1 - Total Lease Costs $ 554 $ 101 Supplemental cash flow information related to leases was as follows (in thousand): For the Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 464 $ 101 Financing cash flows from finance leases 15 - Total cash paid for lease liabilities $ 479 $ 101 Supplemental balance sheet information related to leases was as follows (in thousands): December 31, 2023 December 31, 2022 Operating leases: Operating lease right-of-use assets, net $ 1,566 $ 855 Operating lease liabilities: Current portion 532 209 Long-term portion 929 650 $ 1,461 $ 859 Weighted average remaining lease term (years) 2.96 5.50 Weighted average discount rate 4.65 % 3.75 % Finance leases: Finance lease right-of-use assets, net 22 $ - Finance lease liabilities: Current portion 18 - Long-term portion 5 - $ 23 $ - Weighted average remaining lease term (years) 1.25 - Weighted average discount rate 6.00 % - F- 38 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Future minimum lease payments are as follows (in thousands): Years Ending December 31, Finance Lease Operating Lease Total Future Lease Commitments 2024 $ 19 $ 582 $ 601 2025 5 580 585 2026 - 262 262 2027 - 121 121 Total lease payments to be paid 24 1,545 1,569 Less: future interest expense ( 1 ) ( 84 ) ( 85 ) Lease liabilities 23 1,461 1,484 Less: current maturities ( 18 ) ( 532 ) ( 550 ) Long-term portion of lease liabilities $ 5 $ 929 $ 934 Note 23. Reportable Segments The Company has two reportable segments: (i) e-Commerce Operations, which involves acquiring and leasing, primarily an e-commerce platform to collaborate with businesses to optimize their ability to sell their goods online, domestically, and internationally, and enabling customers and partners to optimize their e-commerce presence and revenue, and other related businesses and (ii) Healthcare Operations, which provides TPA, data management, COVID- 19 related diagnostics and vaccinations, prescription pharmaceuticals, compounded medications, telepharmacy services, anti-retroviral medications, medication therapy management, the supply of prescription medications to long-term care facilities, medication adherence packaging, contracted pharmacy services for 340B covered entities under the 340B Drug Discount Pricing Program, and health practice risk management. The Company evaluates the performance of each of the segments based on profit or loss after general and administrative expenses. While the Company believes there are synergies between the two business segments, the segments are managed separately because each requires different business strategies. The following tables present a summary of the reportable segments (in thousands): For the Twelve Months Ended December 31, 2023 e-Commerce Operations Healthcare Operations Eliminations Total Pharmacy prescription and other revenue, net of PBM fees $ - $ 21,412 $ - $ 21,412 e-Commerce revenue 10,977 - - 10,977 Pharmacy 340B contract revenue - 5,367 - 5,367 Revenues, net $ 10,977 $ 26,779 $ - $ 37,756 Expenses: Cost of revenue 8,122 18,323 - 26,445 Selling, general and administrative 6,633 3,277 - 9,910 Salaries, wages and payroll taxes 2,670 3,973 - 6,643 Goodwill impairment - 13,895 - 13,895 Professional fees 1,595 506 ( 120 ) 1,981 Depreciation and amortization 647 1,463 - 2,110 Total expenses 19,667 41,437 ( 120 ) 60,984 Loss before other (income) expense $ ( 8,690 ) $ ( 14,658 ) $ 120 $ ( 23,228 ) For the Twelve Months Ended December 31, 2022 e-Commerce Operations Healthcare Operations Eliminations Total Pharmacy prescription and other revenue, net of PBM fees $ - $ - $ - $ - e-Commerce revenue 11,710 - - 11,710 Pharmacy 340B contract revenue - - - - Revenues, net $ 11,710 $ - $ - $ 11,710 Expenses: Cost of revenue 9,221 - - 9,221 Selling, general and administrative 5,085 - - 5,085 Salaries, wages and payroll taxes 2,565 - - 2,565 Professional fees 1,552 - - 1,552 Depreciation and amortization 490 - - 490 Total expenses 18,913 - - 18,913 Loss before other (income) expense $ ( 7,203 ) $ - $ - $ ( 7,203 ) F- 39 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) e-Commerce Operations Healthcare Operations Eliminations Total Total assets as of December 31, 2023 $ 40,764 $ 40,384 $ ( 16,679 ) $ 64,469 Total assets as of December 31, 2022 $ 28,644 $ - $ - $ 28,644 Capital expenditures for the year ended December 31, 2023 were approximately $ 109,000 for e-Commerce Operations and $ 538,000 for Healthcare Operations. Note 24. Commitments and Contingencies Litigation On June 22, 2021, Thomas Seifert’s employment as the Company’s Chief Financial Officer was terminated for cause. Mr. Seifert asserts that the termination was not for cause and that he is owed compensation payable under his June 2, 2021 employment agreement. The Company’s position is that Mr. Seifert is not owed any additional compensation relating to his prior service with the Company or arising under any employment agreement. The Company and Mr. Seifert are currently engaged in litigation over the matter of his employment and termination. The Company believes it has adequate defenses to Mr. Seifert’s claims and has asserted affirmative claims for relief against Mr. Seifert including, but not limited to, breach of the employment agreement, breach of his fiduciary duties, fraud in the inducement in connection with the employment agreement, fraudulent misrepresentation, and constructive fraud. A detailed recitation of the Company’s factual allegations supporting these claims can be found in the Company’s Second Amended Complaint, filed June 21, 2022. The Company does not expect to seek substantial monetary relief in the litigation. This dispute is pending before the District Court for the Southern District of Florida under Case No. 1:21 -cv- 22436 -DPG. On July 5, 2022, Mr. Seifert moved to dismiss NextPlat’s Second Amended Complaint, and filed a Counterclaim against the Company and its Chief Executive Officer, Charles M. Fernandez. In his Counterclaim, Mr. Seifert seeks legal remedies in connection with the Company’s June 22, 2021, termination of his employment. Mr. Seifert also claims Retaliatory Discharge under Florida’s Private Whistleblower Act, Defamation, and Negligent Misrepresentation. A jury trial is set to occur during the trial court's two -week trial calendar, starting August 21, 2024. From time to time, the Company may become involved in litigation relating to claims arising out of our operations in the normal course of business. The Company is not currently involved in any pending legal proceeding or litigation, and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which the Company is a party or to which any of the Company’s properties is subject, which would reasonably be likely to have a material adverse effect on the Company’s business, financial condition and operating results. Note 25. Related Party Transactions As of December 31, 2023 , the accounts payable due to related party includes amounts due to David Phipps. Total related party payments due as of December 31, 2023 and December 31, 2022 are $ 8,000 and $ 720 respectively. Those related party payables are non-interest bearing and due on demand. The Company uses an American Express account for Orbital Satcom Corp and an American Express account for GTC, both in the name of David Phipps who personally guarantees the balance owed. For the year ended December 31, 2023 and 2022 , the Company employed two individuals related to Mr. Phipps with gross wages totaling approximately $ 78,000 and $ 56,000 , respectively. On July 12, 2022, the Company hired Lauren Sturges Fernandez, the spouse of Mr. Fernandez, as Manager of Digital Assets. Mrs. Fernandez is an at-will employee with an annual salary of $ 95,000 . On September 22, 2022, Mrs. Fernandez’s title was changed to Chief of Staff and Special Assistant to the Chairman of the Board, with no change to her salary. Previously Mrs. Fernandez was a consultant and earned compensation for her services of $ 10,995 for the year ended December 31, 2022. In April 2023, Mrs. Fernandez’s annual salary increased to $ 125,000 , which was approved by the Board of Directors. F- 40 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) January Offering. The Company received gross proceeds from the sale of the Common Stock in the January Offering of approximately $ 7.2 million, which closed on January 5, 2022. Approximately 73 % of funds raised in the Offering were secured from existing shareholders, and from members of the Company’s senior management and Board of Directors. The following table represents the related party investment: Investor Position held at NextPlat Shares of Common Stock Purchased Aggregate Purchase Price Charles M. Fernandez Executive Chairman and Chief Executive Officer 679,013 $ 2,200,002 David Phipps Director and President of Orbsat. Chief Executive Officer of Global Operations 46,297 $ 150,002 Douglas Ellenoff Vice Chairman and Chief Business Development Strategist 46,297 $ 150,002 Shares are deemed to be indirectly beneficially owned through Sabrina Allan, Mr. Ellenoff’s wife. Mr. Ellenoff has the power to vote and dispose of the shares. Louis Cusimano Director 15,433 $ 50,003 Paul R. Thomson Senior Vice President – Mergers, Acquisitions and Special Projects 15,433 $ 50,003 On January 20, 2022, the Company appointed Rodney Barreto, to its Board. Mr. Barreto was a participant of the January offering and purchased 370,701 shares of common stock for $ 3.24 per share or approximately $ 1.2 million. Mr. Barreto’s investment represented 17 % of the total. Progressive Care Inc . Following the consummation of the Company’s investment in Progressive Care Inc. on September 2, 2022, our Chairman and Chief Executive Officer, Charles M. Fernandez, and our board member, Rodney Barreto, were appointed to Progressive Care’s Board of Directors, with Mr. Fernandez appointed to serve as Chairman of Progressive Care’s Board of Directors and Mr. Barreto appointed to serve as a Vice Chairman of Progressive Care’s Board of Directors. On November 11, 2022, the Progressive Care board of directors elected Mr. Fernandez as the Chief Executive Officer of Progressive Care. In addition, on September 2, 2022, NextPlat, Messrs. Fernandez and Barreto and certain other purchasers purchased from Iliad Research and Trading, L.P. (“Iliad”) a Secured Convertible Promissory Note, dated March 6, 2019, made by Progressive Care to Iliad (the “Note”). The accrued and unpaid principal and interest under the note at the time of the purchase was approximately $ 2.8 million. The aggregate purchase price paid to Iliad for the Note was $ 2.3 Million of which NextPlat contributed $ 1.0 million and Messrs. Fernandez and Barreto contributed $ 400,000 each (the “Note Purchase”). In connection with the Note Purchase, NextPlat, Messrs. Fernandez and Barreto and the other purchasers of the Note entered into a Debt Modification Agreement with Progressive Care. In consideration of the concessions in the Debt Modification Agreement, Progressive Care issued 105,000 shares of its common stock to the purchasers of the Note, of which NextPlat, Charles Fernandez and Rodney Barreto, received 45,653 , 18,261 , and 18,261 shares, respectively, in each case after giving effect to a 1 -for- 200 reverse stock split enacted by Progressive Care on December 30, 2022. On February 1, 2023, the Company entered into a Management Services Agreement with Progressive Care Inc. (“Progressive Care”) to provide certain management and administrative services to Progressive Care for a $ 25,000 per month fee. During May 2023 the management fee was reduced to $ 20,000 per month. During the twelve months ended December 31, 2023 , the Company received $ 235,000 from Progressive Care as management fees. The management fees in the amount of $ 120,000 for the six months ended December 31, 2023 are eliminated as a result of the Progressive Care consolidation as of July 1, 2023. On May 5, 2023, the Company entered into an SPA with Progressive Care Inc., pursuant to which the Company agreed to purchase 455,000 newly issued Units of securities from Progressive Care at a price per Unit of $ 2.20 for an aggregate purchase price of $ 1.0 million (the “Unit Purchase”). Each Unit consists of one share of common stock, par value $ 0.0001 per share, Common Stock and one common stock purchase warrant to purchase a share of Common Stock (the “PIPE Warrants”). On May 9, 2023, pursuant to the DCA, the Company received 570,599 shares, Charles M. Fernandez received 228,240 shares, and Rodney Barreto received 228,240 shares. To induce the approval of the debt conversion pursuant to the DCA, Messrs. Fernandez and Barreto received Inducement Warrants to purchase 190,000 and 30,000 shares of Common Stock, respectively. In addition, the Company and Messrs. Fernandez and Barreto also received a common stock purchase warrant to purchase one share of Common Stock for each share of Common Stock they received upon conversion of the Note. On July 1, 2023, the Company, Charles M. Fernandez, and Rodney Barreto exercised common stock purchase warrants and were issued common stock shares by Progressive Care (the "RXMD Warrants"). The Company exercised common stock purchase warrants on a cashless basis and was issued 402,269 common stock shares. The Company also exercised common stock purchase warrants on a cash basis and paid consideration in the amount of $ 506,000 and was issued 230,000 common stock shares. Mr. Fernandez exercised common stock purchase warrants on a cashless basis and was issued 211,470 common stock shares. Mr. Barreto exercised common stock purchase warrants on a cashless basis and was issued 130,571 common stock shares. After the exercise of the RXMD Warrants, NextPlat and Messrs. Fernandez and Barreto collectively owned approximately 53 % of Progressive Care’s voting common stock. Also, on July 1, 2023, NextPlat and Messrs. Fernandez and Barreto, entered into a voting agreement whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs. Fernandez and Barreto agreed to vote all of the shares of Progressive Care common stock (including any new shares acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Progressive Care common stock) that they own, directly or indirectly, in the same manner that NextPlat votes its shares of Progressive Care common stock. The voting agreement is irrevocable and perpetual in term. Next Borough Capital Fund, LP. On July 7, 2023, the Company entered into an unsecured promissory note agreement with Next Borough Capital Management, LLC (“the Borrower”), whereby the Company loaned $ 250,000 to the Borrower. The note bears interest at an annual rate of 7 %. The outstanding principal balance of the note plus all accrued unpaid interest is due and payable on July 7, 2024, the Maturity Date. Each of the Company, Charles M. Fernandez, Robert D. Keyser, Jr., eAperion Partners, LLC and a revocable trust of Rodney Barreto are members of the Borrower. The balance outstanding on the note as of December 31, 2023 was approximately $ 256,000 . The note is recorded in Notes Receivable Due From Related Party on the Balance Sheets. December Offering. On December 14, 2022, the Company closed a private placement for the sale of 4,575,429 units (each, a “Unit”), each Unit consisting of (i) one share of the Company’s common stock, $ 0.0001 par value per share (the “Common Stock”), and (ii) one warrant to purchase one share of Common Stock (each, a “Warrant”). The offering price of the Units was $ 1.75 per Unit. The Warrants included in the Units are exercisable at a price of $ 1.75 per share and expire three years from the date of issuance. Related party investment represented 48 %, of the approximately $ 8.0 million of the funds raised. Investor Position held at NextPlat Shares of Common Stock Purchased Warrants to purchase Common Stock Aggregate Purchase Price eAperion Partners LLC, principal Charles M. Fernandez Executive Chairman and Chief Executive Officer 1,085,714 1,085,714 $ 1,900,000 David Phipps Director and President of NextPlat. Chief Executive Officer of Global Operations 28,500 28,500 $ 49,875 RLB Market Investments LLC, principal, Rodney Barreto Director 1,085,714 1,085,714 $ 1,900,000 F- 41 Table of Contents NEXTPLAT CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 26. Concentrations e-Commerce operations concentrations: Customers: Amazon accounted for 51.6 % and 54.3 % of the Company’s revenues during the years ended December 31, 2023 and 2022 , respectively. No other customer accounted for 10% or more of the Company’s revenues for either period. Suppliers: The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s purchases for the years ended December 31, 2023 and 2022 (in thousands): December 31, 2023 December 31, 2022 Garmin $ 1,921 22.4 % $ 1,821 20.9 % Globalstar Europe $ 958 11.2 % $ 635 7.3 % Network Innovations $ 935 10.7 % $ 980 11.2 % Iridium Satellite $ 913 10.9 % $ - - % Satcom Global $ 761 8.9 % $ 744 8.5 % Geographic : The following table sets forth revenue as to each geographic location, for the years ended December 31, 2023 and 2022 (in thousands): Year Ended Year Ended December 31, 2023 December 31, 2022 Europe $ 6,687 60.9 % $ 8,617 73.7 % North America 2,575 23.4 % 2,152 18.3 % South America 62 0.6 % 45 0.4 % Asia and Pacific 1,510 13.8 % 760 6.5 % Africa 143 1.3 % 136 1.1 % $ 10,977 100.0 % $ 11,710 100.0 % Healthcare operations concentrations: Suppliers: Progressive Care had significant concentrations with one vendor. The purchases from this significant vendor were approximately 99.0 % of total vendor purchases for the six months ended December 31, 2023 . Customers: Progressive Care s trade receivables are primarily from prescription medications billed to various insurance providers. Ultimately, the insured is responsible for payment should the insurance company not reimburse Progressive Care. Progressive Care generated reimbursements from three significant PBMs for the six months ended December 31, 2023 : 2023 A 31 % B 29 % C 14 % Note 27. Subsequent Events On March 25, 2024, the Company entered into a Stock Purchase Agreement with James T. McKinley to purchase all of the issued and outstanding shares of common stock of Outfitter Satellite, Inc., a Tennessee corporation ("Outfitter"), for aggregate consideration of $ 760,000 subject to adjustment (the "Outfitter Acquisition"). The closing of the Outfitter Acquisition occurred on April 1, 2024. Outfitter provides consumers, commercial and government customers, with advanced satellite-based connectivity solutions from leading brands, including Iridium, Inmarsat and Globalstar. F-42