What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-16 · 171 added, 263 removed, 180 unchanged (71% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) a global pandemic prompting

government-imposed quarantines, suspension of in-person attendance of academic programs, and cessation of certain travel and business

The United States has entered a recession as a result of the COVID-19 pandemic, which may prolong and exacerbate the negative

impact on us.

Although we expect the availability of vaccines and various treatments with respect to COVID-19 to have an overall positive

impact on business conditions in the aggregate over time, the exact timing of these positive developments is uncertain.

In December 2020,

the United States began distributing two vaccines that, in addition to other vaccines under development, are expected to help to reduce

the spread of the coronavirus that causes COVID-19 once they are widely distributed.

If the vaccines prove less effective than currently

understood by the scientific community and the United States Food and Drug Administration, or if there are problems with the acceptance,

availability, timing or other difficulties with widely distributing the vaccines, the pandemic may last longer, and could continue to

impact our business for longer, than we currently expect.

In response to COVID-19, governmental authorities have implemented numerous

measures to try to contain the virus, such as travel bans and restrictions, prohibitions on group events and gatherings, shutdowns of

certain businesses, curfews, shelter in place orders and recommendations to practice social distancing.

Although many governmental measures

have had specific expiration dates, some of those measures have already been extended more than once, and there is considerable uncertainty

regarding the duration of such measures and the implementation of any potential future measures, especially if cases increase across

the United States, with the potential for additional challenges resulting from the emergence of new variants of COVID-19, some of which

may be more transmissible than the initial strain.

Such measures have impacted, and may continue to affect, our workforce, operations,

suppliers and customers.

We reduced the size of our workforce following the onset of COVID-19 and may need to take additional actions

to further reduce the size of our workforce in the future;

such reductions incur costs, and we can provide no assurance that we will

be able to rehire our workforce in the event our business experiences a subsequent recovery.

We took steps to curtail our operating expenses

and conserve cash.

We may elect or need to take additional remedial measures in the future as the information available to us continues

to develop, including with respect to our workforce, relationships with our third-party vendors, and our customers.

There is no certainty

that the remedial measures we have implemented to date, or any additional remedial steps we may take in the future, will be sufficient

to mitigate the risks posed by COVID-19.

Further, such measures could potentially materially adversely affect our business, financial

condition and results of operations and create additional risks for us.

Any escalation of COVID-19 cases across many of the markets we

serve could have a negative impact on us.

Specifically, we could be adversely impacted by limitations on our employees to perform their

work due to illness caused by the pandemic or local, state, or federal orders requiring our stores to close or employees to remain at

limitation of carriers to deliver our product to customers;

product shortages;

limitations on the ability of our customers to conduct

their business and purchase our products and services;

and limitations on the ability of our customers to pay us in a timely manner.

These events may have a material, adverse effect on our results of operations, cash flows and liquidity.

ultimate magnitude of COVID-19, including the full extent of the material negative impact on our financial and operational results, will

depend on future developments, such as the duration and severity of the pandemic, the extent of any additional increases in cases across

the United States, and the related length of its impact on the global economy, as well as the timing and availability of effective medical

treatments and vaccines, which remain uncertain and cannot be predicted at this time.

The resumption of our normal business operations

may be delayed or constrained by lingering effects of COVID-19 on our customers, suppliers and/or third-party service providers.

the extent to which our mitigation efforts are successful, if at all, is not currently ascertainable.

Due to the daily evolution of the

COVID-19 pandemic and the responses to curb its spread, we cannot predict the full impact of the COVID-19 pandemic on our business and

results of operations, but our business, financial condition, results of operations and cash flows have already been materially adversely

impacted, and we anticipate they will continue to be adversely affected by the COVID-19 pandemic and its negative effects on global economic

Any recovery from the COVID-19 pandemic and related economic impact may also be slowed or reversed by a variety of factors,

such as any increase in COVID-19 infections.

Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts

to our business as a result of its national and, to some extent, global economic impact, including the current recession and any recession

that may occur in the future.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

success of our business depends on our global operations, including our supply chain and consumer demand, among other things.

of COVID-19, we have experienced shortages in inventory due to manufacturing issues, a reduction in the volume of sales in some parts

of our business, such as rental sales and direct website sales, and a reduction in personnel due to lockdown related issues.

of operations for the year ended December 31, 2020 reflected this impact.

Recently, some governmental agencies in the US and Europe,

where we produce the largest percentage of our sales, have lifted certain restrictions.

We have incurred strong increases in sales outside

of our Amazon marketplaces for the three months ended March 31, 2022.

However due to uncertainties related to variants of COVID-19, we

are uncertain as to the continuation of the increases to revenue.

beyond our current global network of online storefronts serving thousands of consumers, enterprises, and governments, we intend to develop

a next generation platform for digital assets built for Web3, an internet service built using decentralized blockchains.

Our new platform

(“NextPlat Digital”), which is currently in the design and development phase in collaboration with consultants and contracted

developers, will initially enable the use of non-fungible tokens (“NFTs”), in e-commerce and in community-building activities.

NextPlat Digital may in the future also enable the posting and use of other digital or “crypto” assets once applicable legal

and regulatory requirements are addressed.

As currently contemplated, NextPlat Digital will facilitate the creation/minting, purchase

and sale of a broad range of non-yield-generating and non-fractionalized NFT products, including, but not limited to, art, music, collectables,

digital real estate, video games, game items and certificates of authenticity.

We also anticipated developing and deploying NFTs for

use in tokenizing data for use in brand loyalty programs.

Digital, as currently planned, will be used by us to create both (a) public marketplaces, for us and third-parties, where anyone with

a crypto wallet or credit card can buy an NFT from an authorized user, or, if authorized, sell their own NFTs, and (b) private market

places that only allow a particular company or entity to sell their own NFTs within a branded market (such as for the promotion of a

particular brand or product).

We anticipate that NextPlat Digital will be substantially complete within the next six to nine months.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

determining if and how an NFT can be posted on our platform, we will follow an internally developed model that will permit us to make

a risk-based assessment regarding the likelihood that a particular NFT could be deemed a “security” within the meaning of

federal securities laws.

This process will involve employees trained to identify the indicia of a “security” who

will also work with outside legal counsel experienced in crypto asset regulatory matters to make a determination with respect to each

NFT, or category of NFT, proposed to be posted on our platform.

These processes and procedures are risk based assessments and are not

a legal standard or binding on regulators or courts.

In the event an NFT or other digital asset is deemed by us, pursuant to the above

analysis, to possess a reasonable likelihood of being deemed a security, we will (a) comply with applicable laws and regulations by forming,

acquiring or engaging a licensed broker-dealer authorized to act as an trading system for those digital assets, or (b) transact in such

digital assets offshore in a way that complies with applicable laws and regulations;

or (c) not transact in the subject NFT.

currently intend to undertake or participate in “initial coin offerings”, the minting of “coins” or cryptocurrencies.

creation and operation of NextPlat Digital will also present a number of new regulatory and legal compliance obligations for the Company.

For example, if we are deemed to be involved in the exchange or transmission of value that substitutes for currency, or fall under other

evolving requirements, we may be deemed to be a “money transmitter” and will be subject to Anti-Money Laundering (AML) rules,

as well as U.S.

Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) requirements and state licensing requirements.

In connection with complying with applicable regulations and laws (including Know-Your-Customer (KYC), Anti-Money Laundering (AML) and

Combating the Financing of Terrorism (CFT) regulations) when onboarding new users, we intend to utilize third-party tools to proactively

screen for high-risk wallets, including explicitly sanctioned addresses and addresses associated with sanctioned entities.

The applicable

requirements and our compliance obligations will vary depending on the nature of the client, the service or product provided and jurisdiction.

For example, if we form or acquire a broker dealer in order to post, trade or sell NFTs or other digital assets that are securities,

we will fully comply with all applicable KYC, AML and CFT compliance requirements.

If, on the other hand, we facilitate the distribution

of free promotional corporate collectable NFTs that are not deemed to be securities, our compliance requirements will be significantly

2022 Private Placement of Common Stock

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.

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.

The Company intends to use the proceeds from

the December Offering for general corporate purposes, including potential acquisitions and joint ventures.

Approximately 73% of

funds raised in the December Offering were secured from existing shareholders and from the members of the Company’s senior management

and Board of Directors.

connection with the December Offering, the Company entered into a registration rights agreement with the December Investors (the “Registration

Rights Agreement”), pursuant to which, among other things, the Company agreed to prepare and file with the SEC a registration statement

to register for resale the shares of the Company’s common stock sold in the Offering.

shares of common stock offered and sold in the December Offering were sold in reliance on the exemption from registration provided 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.

terms of the transaction disclosed above, including the provisions of the Purchase Agreement and Registration Rights Agreement, were

approved by the Board of Directors and because some of the securities were offered and sold to officers and directors of the Company,

such terms were separately reviewed and approved by the Audit Committee of the Board of Directors.

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

2022 Name Change

4 unchanged sentences

meeting of stockholders held on December 16, 2021.

January 21, 2022, the Company issued 10,000 shares of common stock in connection with restricted stock awards, with a fair market value

January 21, 2022, the Company issued 10,000 shares of common stock, pursuant to a restricted stock award, “RSA” granted on January

7, 2022 and effective on January 20, 2022.

The award is for 20,000 restricted shares of common, which vest in two equal installments,

the first on effective date and the remaining on the one year anniversary of the effective date, with a fair market value

of $3.48 per share, on the date of issuance.

All shares were fully vested and upon issuance resulted in stock-based

compensation of $34,800.

Shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities

Act of 1933, as amended, as there was no general solicitation, and the transaction did not involve a public offering.

All shares were fully vested and upon issuance resulted in stock-based compensation of $34,800.

Shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended,

as there was no general solicitation, and the transaction did not involve a public offering.

For the six months ended June

30, 2022, pursuant to Mr.

Fernandez employment agreement, the “June Agreement”, see Note 12, the Company recorded stock-based

compensation and additional paid in capital, in the amount of $654,246.

This amount is valued from the date of the award May 28, 2021

to June 30, 2022.

The value of the award for the year ended December 31, 2021 was $356,712 and for the six months ended June 30, 2022,

The award is valued over the service period of the June Agreement, five years from the date of grant, May 28, 2021.

2, 2022, 200,000 of the RSA or one third of the award, became vested and issuable.

On July 22, 2022, the Company issued 200,000 of restricted

common stock, see Note 14.

Resource Planning System (ERP)

April 1, 2022, the Company went live with its implementation of an enterprise resource planning “ERP” system to replace our

legacy business applications.

The new ERP platform will provide better support for our changing business needs and plans for future growth.

April 1, 2022, the Company commenced with its implementation of an enterprise resource planning “ERP” system, to replace

our legacy business applications.

The new ERP platform will provide better support for our changing business needs and plans for future

The project includes software, external implementation assistance, testing, training, and support.

We anticipate that approximately 40%

of the cost will be expensed in the period incurred and 60% will be capitalized and depreciated over its useful life.

The Company intends

to maintain dual accounting systems, until such time it is deemed acceptable.

of March 31, 2022, there were 50,000,000 shares of common stock authorized and 9,293,096 shares issued and outstanding.

As of March 31, 2022, there were

2,836,092 registered warrants to purchase common stock authorized and 2,530,092 registered warrants issued and outstanding, at

an exercise price of $5.00, and 144,000 unregistered underwriter warrants issued and outstanding, at an exercise price

For the six months ended June 30, 2022, approximately

26% of the cost was expensed in the period incurred to SGA and 74% was capitalized and depreciated over its useful life.

intends to maintain dual accounting systems, until such time it is deemed acceptable.

June 22, 2022, the Company formed NextPlat B.V., a Netherlands limited liability company, as a wholly-owned subsidiary.

At present, NextPlat

B.V., has no active operations.

of June 30, 2022, there were 50,000,000 shares of common stock authorized and 9,293,096 shares issued and outstanding.

of June 30, 2022, there were 2,836,092 registered warrants to purchase common stock authorized and 2,530,092 registered warrants issued

and outstanding, at an exercise price of $5.00, and 144,000 unregistered underwriter warrants issued and outstanding, at an exercise

price of $5.50.

The warrants expire in June of 2026.

As of March 31, 2022, there were

no shares of Series A, B, C, D, E, F, G, H, I, J, K and L Convertible Preferred Stock authorized, and no shares issued and outstanding.

We had net cash used in

operations of $868,558 during the three months ended March 31, 2022.

At March 31, 2022, we had working capital of $22,766,775.

Additionally, at March 31, 2022, we had an accumulated deficit of $22,836,298 and stockholder’s equity of $23,705,244.

of Operations for the Three Months Ended March 31, 2022 compared to the Three Months Ended March 31, 2021

for the three months ended March 31, 2022, consisted primarily of sales of satellite phones, tracking devices, accessories, and airtime

For the three months ended March 31, 2022, revenues generated were $3,577,778 compared to $1,461,428 of revenues for the three

months ended March 31, 2021, an increase in total revenues of $2,116,350 or 144.8%.

of June 30, 2022, there were no shares of Series A, B, C, D, E, F, G, H, I, J, K and L Convertible Preferred Stock authorized, and no

shares issued and outstanding.

had net cash used in operations of $1,888,252 during the six months ended June 30, 2022.

At June 30, 2022, we had working capital of

Additionally, at June 30, 2022, we had an accumulated deficit of $24,492,159 and stockholder’s equity of $22,698,841.

of Operations for the Three and Six Months Ended June 30, 2022, compared to the Three and Six Months Ended June 30, 2021

Net Sales for the six months ended June 30, 2022, consisted primarily of sales of satellite phones, tracking devices, accessories

and airtime plans.

For the six months ended June 30, 2022, revenues generated were $6,499,257 compared to $3,417,688 of revenues for

the six months ended June 30, 2021, an increase in total revenues of $3,031,569 or 88.7%.

Total net sales for Global Telesat Communications

were $4,542,671 for the six months ended June 30, 2022, as compared to $2,398,912 for the six months ended June 30, 2021, an increase

of $2,143,759 or 89.4%.

Total net sales for Global Telesat Communications Ltd as valued in its home currency of GBP was £3,496,302,

for the six months ended June 30, 2022, as compared to £1,728,190, for the six months ended June 30, 2021, an increase of £1,768,112

The net effect of the exchange rate GBP:USD on revenue for the six months ended June 30, 2022, was reduced by $310,570, using

GBP:USD exchange rate yearly average of 1.299279 for the six months ended June 30, 2022 as compared to GBP:USD 1.38811 for the six months

ended June 30, 2021.

Total net sales for Orbital Satcom Corp.

were $1,906,586 for the six months ended June 30, 2022, as compared to

$1,018,776, for the six months ended June 30, 2021, an increase of $887,810 or 87.1%.

sales for the three months ended June 30, 2022, consisted primarily of sales of satellite phones, tracking devices, accessories, and

airtime plans.

For the three months ended June 30, 2022, revenues generated were $2,871,479 compared to $1,956,260 of revenues for the

three months ended June 30, 2021, an increase in total revenues of $915,219 or 46.8%.

Total sales for Global Telesat Communications Ltd.

were $2,595,840 for the three months ended March 31, 2022, as compared to $1,013,435 for the three months ended March 31, 2021, an increase

were $1,946,831 for the three months ended June 30, 2022, as compared to $1,392,609 for the three months ended June 30, 2021, an increase

of $554,221 or 39.8%.

Total sales for Orbital Satcom Corp.

were $981,938 for the three months ended March 31, 2022 as compared to

$447,993, for the three months ended March 31, 2021, an increase of $533,945 or 119.2%.

The Company attributes the changes in

revenue to new product lines, increased inventory, and additional e-commerce storefronts.

Cost of Sales .

During the three months ended March 31, 2022, cost of revenues increased to $2,776,685 compared to $1,023,911, for the three months

ended March 31, 2021, an increase of $1,752,774 or 171.2%.

Gross profit margins during the three months ended March 31, 2022 were 22.4%

as compared to 29.9% for the comparable period in the prior year.

The decrease is primarily due to a lower percentage of high margin sales

int the first quarter ended March 31, 2022 as compared to the same period in 2021.

were $924,648 for the three months ended June 30, 2022 as compared to $563,650,

for the three months ended June 30, 2021, an increase of $360,998 or 64.0%.

The Company attributes the changes in revenue to new product

lines, increased inventory, and additional e-commerce storefronts, offset by disruption of sales due to economic sanctions imposed on

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Total operating expenses for the three months ended March 31, 2022, were $1,635,708, an increase of $899,262

or 122.1%, from total operating expenses for the three months ended March 31, 2021, of $736,446 .

Factors contributing to the decrease

are described below.

Selling, general and administrative

expenses were $574,350 and $175,890 for the three months ended March 31, 2022 and 2021, respectively, an increase

During the six months ended June 30, 2022, cost of sales increased to $5,080,775 compared to $2,438,681, for

the six months ended June 30, 2021, an increase of $2,642,094 or 108.3%.

Gross profit margins during the six months ended June 30, 2022

were 21.2%, as compared to 28.7% for the comparable period in the prior year.

During the three months ended June 30, 2022, cost of sales

increased to $2,304,090 compared to $1,414,770, for the three months ended June 30, 2021, an increase of $889,320 or 62.9%.

margins during the three months ended June 30, 2022, were 19.8% as compared to 27.69% for the comparable period in the prior year.

indicated by the results for the three and six months, our gross profit margins have decreased by 7.9% and 7.4%, respectively.

is primarily due to significant increases in the cost of inventory and freight, an increase in sales to distributors which attract lower

percentage profits, as well as, selling some items at a discounted rate to charities for use in Ukraine.

Total operating expenses for the six months ended June 30, 2022 were $3,736,346, an increase of $1,909,074 or

104.5%, from total operating expenses for the six months ended June 30, 2021 of $1,827,272 .

Total operating expenses for the three

months ended June 30, 2022 were $2,100,638, an increase of $1,009,812 or 92.6%, from total operating expenses for the three months ended

June 30, 2021 of $1,090,826 .

Factors contributing to the decrease are described below.

general and administrative expenses were $1,735,205 and $443,696 for the six months ended June 30, 2022 and 2021,

respectively, an increase of $1,291,509 or 291.1%.

Selling, general and administrative expenses were $1,160,855 and $282,006 for the

three months ended June 30, 2022 and 2021, respectively, an increase of $878,849 or 311.6%.

The increase, for the three and six

months ended June 30, 2022, is attributable to an increase in non-cash stock-based compensation of $689,046, certain SG&A

expenses such bank charges, credit card fees, Amazon fees, and shipping charges that fluctuate with sales volatility, an increase in

medical, liability and D&O insurance and an increase in marketing initiatives.

wages and payroll taxes were $1,306,373 and $687,712 for the six months ended June 30, 2022 and 2021, respectively, an increase

of $618,661, or 90.0%.

The fluctuations in the increase, for the three months ended March 31, 2022, are attributable to

certain SG&A expenses that fluctuate with sales volatility, as well as, an increase in marketing expenses, stock-based compensation,

D&O and medical insurance, recruiting expenses and other costs associated with an increase in personnel.

Salaries, wages and payroll

taxes were $635,576 and $208,174, for the three months ended March 31, 2022 and 2021, respectively, an increase of $427,402, or

The increase is a result of an increase in personnel, for the three months ended March 31, 2022.

fees were $326,213 and $292,882 for

the three months ended March 31, 2022 and 2021, respectively, an increase of $33,331, or 11.4%.

The increase during the

three months ended March 31, 2022 as compared to the same period in 2021, is attributable to increase in director fees, accounting and

legal fees, offset by a reduction in professional fees related to the public offering from the quarter ended March 31, 2021.

and amortization expenses were $99,569 and $73,700 for the three months ended March 31, 2022 and 2021, respectively, an increase

Salaries, wages and payroll taxes were $670,797 and $479,538 for the three months ended June 30, 2022, and 2021,

respectively, an increase of $191,259, or 39.9%.

The increase is a result of executive management additions, adjusted salaries and an

increase in personnel.

fees were $483,203 and $548,916 for the six months ended June 30, 2022 and 2021, respectively, a decrease of $65,713, or 12.0%.

Professional fees were $156,990 and $256,034 for the three months ended June 30, 2022 and 2021, respectively, a decrease of $99,044,

The decrease during the three and six months ended June 30, 2022 as compared to the same period in 2021, is attributable to

the higher fees in the same period of 2021, that were associated with capital raising efforts and up-listing to Nasdaq.

and amortization expenses were $211,565 and $146,948 for the six months ended June 30, 2022 and 2021, respectively, an increase

of $64,617 or 44.0%.

The increase was primarily attributable to the addition of fixed assets offset by fully amortized assets, as compared

to the same period in the prior year.

Depreciation and amortization expenses were $111,996 and $73,248 for the three months ended June 30, 2022 and 2021,

respectively, an increase of $38,748 or 52.9%.

The increase was primarily attributable capitalized expenditures for software and website

development and equipment and leaseholds for the new corporate office space in Florida.

expect our expenses in each of these areas to continue to increase during fiscal 2022 and beyond as we expand our operations and begin

generating additional revenues under our current business.

Similarly, we are unable at this time to estimate the amount of the expected

We are unable at this time to estimate the amount of the expected increases.

Other Expense .

Our total other expenses were $15,468 compared to $504,213 during the three months ended March 31, 2022

and 2021, respectively, a decrease of $488,745.

The decrease is attributable to interest expense incurred in the same period of the prior

We recorded net loss before income tax of $850,083 for the three months ended March 31, 2022 as compared to a net loss

of $803,142, for the three months ended March 31, 2021.

The increase in the loss is a result of the factors as described above.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Our total other expense was $138,080, compared to $1,413,271 during the six months ended June 30, 2022

and 2021, respectively, a decrease of $1,275,191 or 90.2%.

Our total other expense was $122,612 compared to $909,058 during the three

months ended June 30, 2022 and 2021, respectively.

The decrease for the three and six months ended June 30, 2022, as compared to the

prior year, is attributable to the reduction in interest expense from the prior year of $1,454,677, offset by an increase in foreign

exchange rate of $168,226 and an increase in interest earned of $9,572.

The decrease in interest expense is relative to the elimination of all debt, except for the balance of $248,369,

representing the coronavirus loan debt from the prior year.

We recorded net loss before income tax of $1,655,861 and $2,505,944 for the three and six months ended June 30, 2022 as

compared net loss of $1,458,394 and a net loss of $2,261,536, for the three and six months ended June 30, 2021.

The increase in the loss

is a result of the factors as described above.

Comprehensive

Gain (Loss) .

We recorded a loss for foreign currency translation adjustments for the three months ended March 31, 2022

of $15,330 and a gain of $1,611 for the three months ended March 31, 2021.

The fluctuations of the increase/decrease are primarily attributed

to the increase/decrease recognized due to exchange rate variances.

Loss We recorded a loss for foreign currency translation adjustments for the three and six months ended June 30, 2022 of $4,788

For the three and six months ended June 30, 2021 we recorded a loss of $14,345 and a loss of $12,734.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

and Capital Resources

1 unchanged sentence

on an ongoing basis.

At March 31, 2022, we had a cash balance of $21,907,935.

Our working capital is $22,766,775 at March 31, 2022.

current assets at March 31, 2022 increased 26% from December 31, 2021 and included cash, accounts receivable, prepaid expenses, unbilled

revenue, right of use, inventory and other current assets.

current liabilities at March 31, 2022 decreased 38.6% from December 31, 2021 and included our accounts payable, due to related party,

provision for income taxes, contract liabilities, lease liabilities and other liabilities in the ordinary course of our business.

At March 31, 2022, the Company

had an accumulated deficit of $22,836,298, working capital of $22,766,775 and net loss of $850,083 during the three months ended March

At June 30, 2022, we had a cash balance of $20,467,722.

Our working capital is $21,324,348 at June 30, 2022.

current assets at June 30, 2022 increased $3,455,859 or 18% from December 31, 2021 and included cash, accounts receivable, VAT receivable,

prepaid expenses, unbilled revenue, inventory and other current assets.

current liabilities at June 30, 2022 decreased $1,274,282 or 45.8% from December 31, 2021 and included our accounts payable, due to related

party, provision for income taxes, contract liabilities, lease liabilities and other liabilities in the ordinary course of our business.

June 30, 2022, the Company had an accumulated deficit of $24,492,159, working capital of $21,324,348 and net loss of $2,505,944 during

the six months ended June 30, 2022.

of the date of this report, the Company’s existing cash resources and existing borrowing availability are sufficient to support

2 unchanged sentences

operating activities for at least one year past the issuance date of the financial statements.

Net cash flows used by operating

activities for the three months ended March 31, 2022 amounted to $868,558 and were primarily attributable to our net loss of $850,083,

total amortization expense of $6,250 and depreciation of $93,319, amortization of right of use of $8,803, stock based compensation of

$34,800 and net change in assets and liabilities of $161,647, primarily attributable to an increase in accounts receivable of

$70,307, an increase in inventory of $453,496, a decrease in unbilled revenue of $8,278, an increase in prepaid expense of $26,232, a

decrease in VAT receivable of $33,044, a decrease in other current assets of $48,539, an increase in accounts payable of $352,201, a

decrease in contract liabilities of $6,401, a decrease in lease liabilities of $8,718, and decrease in provision for income taxes of

cash flows used by operating activities for the three months ended March 31, 2021 amounted to $459,764 and were primarily attributable

cash flows used by operating activities for the six months ended June 30, 2022 amounted to $1,888,252 and were primarily

attributable to our net loss of $2,505,944, total amortization expense of $12,500 and depreciation of $199,065, stock based

compensation of $689,046 and net change in assets and liabilities of $282,919, primarily attributable to decrease in accounts

receivable of $4,921, an increase in inventory of $350,729, an increase in unbilled revenue of $20,394, a decrease in prepaid

expense of $39,988, a decrease in VAT receivable of $31,876, a decrease in other current assets of $45,666, a decrease in operating

lease liabilities of $7,041, an increase in accounts payable of $22,354, a decrease in contract liabilities of $9,655, and decrease

in provision for income taxes of $39,905.

cash flows used by operating activities for the six months ended June 30, 2021 amounted to $1,270,837 and were primarily attributable

to our net loss of $2,261,536, total amortization expense of $12,500 and depreciation of $134,448, amortization of discount on debt of

increase in stock based compensation of $14,200, a decrease in right of use of $7,563 and net change in assets and liabilities

of $253,249, primarily attributable to an increase in accounts receivable of $94,176, an increase in inventory of $239,490, an increase

in unbilled revenue of $2,067, , an increase in other current assets of $19,195, increase in accounts payable of $114,261, a decrease

in contract liabilities of $5,157, a decrease in lease liabilities of $7,589, and an increase in provision for income taxes of $164.

cash flows used in investing activities were $67,997 and $459 for the three months ended March 31, 2022 and 2021, respectively.

During the three months ended March 31, 2022 and March 31, 2021, we purchased property and equipment of $0 and $459, respectively.

$1,425,366, amortization of right to use of $15,476 gain on extinguishment of debt of $20,832, stock based compensation of $14,200 and

net change in assets and liabilities of $590,459, primarily attributable to an increase in accounts receivable of $158,079, an increase

in inventory of $790,536, an increase in unbilled revenue of $10,171, an increase in VAT receivable of $279,215, an increase in other

current assets of $3,664, increase in accounts payable of $662,022, an increase in contract liabilities of $4,469, a decrease in lease

liabilities of $15,512, and an increase in provision for income taxes of $227.

cash flows used in investing activities were $395,245 and $27,248 for the six months ended June 30, 2022 and 2021, respectively.

the six months ended June 30, 2022 and June 30, 2021, we purchased equipment, website development and leaseholds of $395,245 and $27,248,

respectively.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Net cash flows provided by financing

activities were $5,608,353 and $289,131 for the three months ended March 31, 2022 and 2021, respectively.

Net cash flows provided

by financing activities were $5,608,353 for the three months ended March 31, 2022 and were primarily attributed to proceeds from

common stock offering of $5,605,038, proceeds from related party of $19,737 and offset by repayments of notes payable for $16,422.

cash flows provided by financing activities were $289,131 for the three months ended March 31, 2021 and were for proceeds from a convertible

note payable of $350,000 and offset by repayments of notes payable for $60,643.

cash flows provided by financing activities were $5,539,317 and $14,997,706 for the six months ended June 30, 2022 and 2021, respectively.

Net cash flows provided by financing activities were $5,539,317 for the six months ended June 30, 2022 and were primarily attributed

to proceeds from common stock offering of $5,605,038, offset by repayments of notes payable for $30,413 and repayments of related party

payable $35,308.

cash flows provided by financing activities were $14,997,706 for the six months ended June 30, 2021 and were for, proceeds from;

a convertible

note payable of $350,000, related party payable of $114,981, the June Offering, of $14,649,573, proceeds of warrant exercise of $5,000

which was offset by repayments of notes payable for $121,848.

Sheet Arrangements

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the assumptions used to calculate stock-based compensation, derivative liabilities and common stock issued for services.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Reclassification

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of Presentation and Principles of Consolidation

consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America

The consolidated financial statements of the Company include the Company and its wholly-owned subsidiaries,

Orbital Satcom Corp.

and Global Telesat Communications Ltd.

All material intercompany balances and transactions have been eliminated

in consolidation.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of

America (“US GAAP”).

The consolidated financial statements of the Company include the Company and its wholly owned

subsidiaries, Orbital Satcom Corp, Global Telesat Communications Ltd.

and NextPlat B.V.

All material intercompany balances and

transactions have been eliminated in consolidation.

receivable and allowance for doubtful accounts

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been exhausted and the potential for recovery is considered remote.

As of March 31, 2022, and 2021, there were no allowances for doubtful

As of June 30, 2022, and 2021, there were no allowances for doubtful

are valued at the lower of cost or net realizable value, using the first-in first-out cost method.

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value of inventories is recorded to cost of goods sold.

expenses amounted to $172,950 and $146,935, at March 31, 2022 and December 31, 2021, respectively.

expenses amounted to $106,947 and $146,935, at June 30, 2022 and December 31, 2021, respectively.

Prepaid expenses include prepayments

in cash for rent, insurance, pre-payments associated with the Company’s new office and software license fees which are being amortized

over the terms of the respective agreement.

The current portion consists of costs paid for future services which will occur within a

in cash for rent, insurance and software license fees which are being amortized over the terms of the respective agreement.

portion consists of costs paid for future services which will occur within a year.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

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relevant translation rates are as follows:

for the three months ended March 31, 2022, closing rate at 1.3138 US$:

for the six months ended June 30, 2022, closing rate at 1.2165 US$:

GBP, quarterly average

rate at 1.256640 US$:

GBP, for the three months ended March 31, 2021, closing rate at 1.3783 US$:

GBP, quarterly average rate at 1.379068

GBP, for the year ended 2021 closing rate at 1.353372 US$:

GBP, average rate at 1.375083 US$:

GBP and yearly average rate at 1.29979 US$:

GBP, for the six months ended June 30, 2021, closing rate at 1.382800

GBP, quarterly average rate at 1.397146 US$:

GBP and yearly average rate at 1.388107 US$:

GBP, for the year ended 2021 closing rate

at 1.353372 US$:

GBP, yearly average rate at 1.375083 US$:

Recognition and Unearned Revenue

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are expensed as incurred.

Leasehold improvements have an estimated service life of the term of the respective lease.

estimated useful lives of property and equipment are generally as follows:

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The Company did not consider it necessary to record any impairment charges during the periods

ended March 31, 2022 and March 31, 2021, respectively.

ended June 30, 2022 and June 30, 2021, respectively.

for Derivative Instruments

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the vesting period of the equity award).

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Accounting Pronouncements

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The Company is currently evaluating the impact that this standard will have on its consolidated financial statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

October 2021, the FASB issued guidance which requires companies to apply Topic 606, Revenue from Contracts with Customers, to recognize

14 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis