NTRP.NASDAQNexttrip, INC
10-Q: NextTrip, Inc. Reports Widening Losses and Going Concern Doubts Amid Strategic Expansion
Sentiment:
Quarterly Report
NextTrip, Inc. reported a significant increase in net loss and a deteriorating working capital position for the quarter ended May 31, 2025, despite advancing its travel technology and media platform through key acquisitions and partnerships, highlighting substantial doubt about its ability to continue as a going concern without additional financing.
Delay expectedIssuance of Contingent Shares was delayed due to "delays with the Company's Form S-1 registration statement and the Company's pending initial listing application with Nasdaq."A Forbearance Agreement was entered into on December 9, 2024, and extended on January 31, 2025, to defer the issuance of Contingent Shares until Nasdaq approval was obtained.The Miller Warrant's exercise price decreased and the number of shares increased because stockholder approval for removal of the Exchange Cap was not obtained by May 1, 2025.
Capital raiseThe company "will need to raise additional funds through equity or debt financings or other means to support its on-going operations."A minimum of $5.5 million is estimated to be required to continue operations for the next twelve months.On April 1, 2025, the company entered into a securities purchase agreement with Alumni Capital LP for the sale of a short-term promissory note ($360,000 principal) and warrants for $300,000 total consideration. This note was repaid on July 1, 2025.On April 9, 2025, NextTrip Holdings, Inc. entered into two promissory notes with the Donald P. Monaco Insurance Trust for $500,000 (new cash) and $145,000 (cash advances), under a $2.0 million line of credit.On May 6, 2025, the company entered into a $3.0 million revolving Line of Credit Agreement with Monaco Investment Partners II, LP, with $1,486,575 drawn as of May 31, 2025, and $2,186,575 drawn as of July 10, 2025.Subsequent to May 31, 2025, the company sold 75,000 restricted shares of common stock to an accredited investor for $226,500.
Worse than expectedNet loss applicable to common stockholders increased by 127% to $4,521,695 for the three months ended May 31, 2025, compared to $1,989,405 in the prior year period.Revenue decreased by 27% to $138,827 for the quarter ended May 31, 2025, from $188,793 in the same period of 2024.Cash and cash equivalents declined by $931,461 to $130,906 as of May 31, 2025.Working capital deficit expanded significantly to $1,142,891 as of May 31, 2025.The company explicitly states "substantial doubt about our ability to continue as a going concern for 12 months from the date of the filing of this Report."
Summary
- Net loss applicable to common stockholders increased by 127% to $4,521,695 for the three months ended May 31, 2025, compared to $1,989,405 in the prior year period.
- Revenue decreased by 27% to $138,827 for the quarter ended May 31, 2025, from $188,793 in the same period of 2024.
- Total operating expenses surged by 138% to $4,678,643, primarily driven by a $1,970,933 increase in organizational costs due to directors' stock options and a $625,603 increase in professional service fees.
- Cash and cash equivalents declined to $130,906 as of May 31, 2025, from $1,062,367 at February 28, 2025.
- Working capital deficit expanded to $1,142,891 as of May 31, 2025, from $105,577 at February 28, 2025.
- The company completed the acquisition of FSA Travel, LLC, making it a wholly-owned subsidiary, and acquired Journy.tv assets, expanding its travel and media offerings.
- All contingent shares related to the NextTrip Acquisition milestones have been issued, totaling 5,843,993 shares.
- The company secured a $3.0 million revolving line of credit from Monaco Investment Partners II, LP, a related party, with $1,486,575 drawn as of May 31, 2025.
Sentiment
Score: 2
Explanation: The company faces severe financial challenges, including a significant accumulated deficit, widening net losses, and a deteriorating cash position, leading to substantial doubt about its ability to continue as a going concern. While strategic acquisitions and product launches indicate a long-term vision, the immediate financial instability and reliance on related-party financing present high risks.
Positives
- Gross profit increased to $38,906 for the three months ended May 31, 2025, from $15,212 in the prior year, indicating improved margin on reduced sales.
- Successfully completed the acquisition of FSA Travel, LLC, enhancing luxury and cruise offerings with over 5,000 five-star properties and 400,000 monthly site visitors.
- Acquired Journy.tv assets, expanding media properties and content for the integrated travel and media ecosystem.
- Launched NextTrip Cruise, providing access to over 10,000 sailings and 35 cruise partners.
- Established a strategic partnership with Intimate Hotels of Barbados (IHB), becoming their official booking engine for over 35 independent properties.
- Achieved all business milestones for the NextTrip Acquisition, leading to the issuance of all 5,843,993 contingent shares.
- Secured a $3.0 million revolving line of credit from Monaco Investment Partners II, LP, providing crucial financing.
- Implemented a new 2023 Equity Incentive Plan, reserving 7,000,000 shares for issuance to attract and retain talent.
Negatives
- Net loss applicable to common stockholders increased by 127% to $4,521,695 for the three months ended May 31, 2025, compared to $1,989,405 in the prior year period.
- Revenue decreased by 27% to $138,827 for the quarter ended May 31, 2025, from $188,793 in the same period of 2024, primarily due to limited marketing expenditures.
- Total operating expenses increased by 138% to $4,678,643, largely due to a significant increase in organizational costs ($1,999,670) and professional service fees ($1,149,476).
- Cash and cash equivalents decreased by $931,461 to $130,906 as of May 31, 2025, from $1,062,367 at February 28, 2025.
- Working capital deficit worsened to $1,142,891 as of May 31, 2025, from $105,577 at February 28, 2025.
- Accumulated deficit grew to $38,871,518 as of May 31, 2025.
- Substantial doubt exists about the company's ability to continue as a going concern for the next 12 months without additional funding.
- A promissory note receivable from NextPlay Technologies, Inc. of $2,567,665 is deemed uncollectible due to NextPlay's involuntary bankruptcy proceedings, leading to a full allowance for credit losses.
- Increased reliance on related party financing, with $1,486,575 outstanding on the MIP Line of Credit as of May 31, 2025, and $2,186,575 as of July 10, 2025.
Risks
- Substantial doubt about the ability to continue as a going concern for the next 12 months due to accumulated deficit, working capital deficit, and insufficient cash to fund operations.
- Inability to raise additional funds through equity or debt financings, which could lead to scaling back or terminating business operations and potential delisting from Nasdaq.
- Potential for significant dilution to existing stockholders if future financing is in the form of equity, or onerous terms if in the form of debt.
- Uncertainty regarding the collectability of the $2,567,665 promissory note from NextPlay Technologies, Inc. due to ongoing involuntary bankruptcy proceedings.
- Reliance on related party financing, which may introduce conflicts of interest or less favorable terms compared to arm's-length transactions.
- The company's early stage of commercial operations means current revenue streams are small and unpredictable.
- Successful execution of the business strategy is predicated on broadening and deepening the supplier base, cultivating a robust customer network, and obtaining adequate financing for marketing and product development.
- The timeline for completing new programs and fully integrating the travel and media model is dependent on the ability to raise capital.
Future Outlook
The company is in the early stages of developing and rolling out its comprehensive travel and media model, with current revenue streams being small and unpredictable. Successful execution of the business strategy depends on expanding the supplier base, cultivating a robust customer network, and securing adequate financing for marketing and continued product development. The timeline for completing new programs is contingent upon obtaining necessary funding, with most programs expected to be delivered within 180 days of securing such financing. The company anticipates driving revenues from travel solutions outside the focus of major competitors and reducing external marketing expenditures by leveraging its integrated media ecosystem for targeted advertising.
Management Comments
- Our ability to capitalize on existing travel technology platforms is severely restricted due to the lack of funding to drive marketing programs.
- Enhancements to the existing platforms along with the introduction of new programs under development are needed to complete the model. The timeline to complete these programs is dependent upon our ability to raise capital; however, we believe that most programs can be delivered within 180 days of obtaining such necessary funding.
- Once fully functioning, we believe the model will deliver accelerated growth as its conversion technology focuses on underserved areas in the travel sector utilizing platforms (i.e. PayDlay, Groups bookings and Travel Agents) that are not well serviced by the major travel industry leaders.
- We expect to drive revenues from travel solutions outside of the focus of major travel competitors.
- This ecosystem is expected to assist us in reducing external marketing expenditures while creating a new revenue channel from targeted and timely advertising designed to assist users in their travel planning.
Industry Context
NextTrip operates in the highly competitive online travel agency (OTA) and travel technology sector, aiming to differentiate itself by integrating travel booking with media content. While major OTAs focus on volume bookings with limited service support, NextTrip seeks to provide a more comprehensive, concierge-level experience through its NXT2.0 platform, specialty features like PayDlay, and targeted offerings for groups and travel agents. The company's strategy to leverage media properties like Journy.tv and Travel Magazine for content-to-commerce integration aligns with broader industry trends of personalized travel experiences and diversified revenue streams beyond direct bookings, including advertising. However, its early stage and significant capital requirements contrast with established, well-funded industry leaders.
Comparison to Industry Standards
- NextTrip's strategy of integrating travel booking with media content (Journy.tv, Compass.tv, Travel Magazine) aims to differentiate from traditional OTAs like Expedia or Booking.com, which primarily focus on transactional volume.
- The introduction of specialty features such as PayDlay (delayed payment booking) and dedicated platforms for groups and travel agents targets underserved niches, contrasting with the broader, more generalized offerings of large industry players.
- The acquisition of Five Star Alliance, with its curated portfolio of over 5,000 five-star properties and a 4.9-star Trustpilot rating, positions NextTrip to compete in the luxury travel segment, similar to high-end travel agencies or specialized luxury booking platforms.
- The company's reliance on third-party API integrations (e.g., Expedia's global hotel database, Nuite, Global Distribution Systems, Signature Vacations) for inventory depth is a common industry practice, but its objective to negotiate fixed-base-pricing agreements for margin optimization is a strategic move to gain more control than typical commission-based models.
- The current nominal revenue generation and significant net losses ($4.52 million for the quarter) are substantially below the financial performance of established industry leaders, indicating a very early stage of commercial viability.
- The stated need for a minimum of $5.5 million to continue operations for the next twelve months highlights a capital intensity that is typical for technology development and market penetration in competitive industries, but also a critical financial vulnerability compared to well-capitalized competitors.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Director | N/A | Bill Kerby (Chief Executive Officer) | 2025-07-17 | Appointment to fill newly created vacancy, increasing board size. |
| Director | N/A | Andy Kaplan | 2025-07-17 | Appointment to fill newly created vacancy, increasing board size. |
| Director | Salvatore Battinelli | Stephen Kircher | 2025-07-28 | Appointment as part of Board Appointment Rights under the Exchange Agreement. |
| Director | Jacob Brunsberg | Jimmy Byrd | 2025-07-28 | Appointment as part of Board Appointment Rights under the Exchange Agreement. |
| Director | Dennis Duitch | Carmen Diges | 2025-07-28 | Appointment as part of Board Appointment Rights under the Exchange Agreement. |
| Director | Kent Summers | David Jiang | 2025-07-28 | Appointment as part of Board Appointment Rights under the Exchange Agreement. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Board Size Increase | The Board of Directors adopted a resolution to increase the size of the board from five to seven members. | 2025-07-17 | Expands board oversight and potentially brings new expertise, but also increases governance complexity. |
| Committee Appointments | New directors appointed to Audit Committee (Carmen Diges Chair, Stephen Kircher, Jimmy Byrd), Compensation Committee (Jimmy Byrd Chair, Stephen Kircher, Carmen Diges), and Nominations & Governance Committee (David Jiang Chair, Carmen Diges). | 2025-07-28 | Restructures key board committees, potentially influencing financial oversight, executive compensation, and director nominations. |
| Equity Incentive Plan | Stockholders approved the NextTrip 2023 Equity Incentive Plan, reserving 7,000,000 shares for issuance. | 2023-12-28 | Provides a framework for equity-based compensation to attract and retain employees, consultants, and directors, aligning their interests with stockholders. |
| SAR Plan Vesting | All outstanding unvested Stock Appreciation Rights (SARs) became immediately vested and exercisable upon the change in control effected by the issuance of Contingent Shares. | 2025-03-26 | Accelerated vesting of SARs, potentially increasing compensation expense and immediate payout obligations. |
Legal Proceedings
- NextPlay Technologies, Inc. (NextPlay) is in involuntary bankruptcy proceedings due to unpaid fees.
- Donald P. Monaco, William Kerby, and Ian Sharpe (Company's Chairman, CEO, and COO of Media division, respectively) filed a petition to force NextPlay into involuntary bankruptcy.
- The company has established an allowance for credit losses for the full amount of the $2,567,665 promissory note receivable from NextPlay due to uncertain collectability.
Related Party Transactions
- On April 9, 2025, NextTrip Holdings, Inc. entered into two promissory notes with the Donald P. Monaco Insurance Trust (Donald Monaco, Chairman of the Board, is trustee) for $500,000 (new cash) and $145,000 (cash advances), as part of a $2.0 million line of credit.
- On May 6, 2025, the company entered into a $3.0 million revolving Line of Credit Agreement with Monaco Investment Partners II, LP (controlled by Donald Monaco). An initial advance of $1,045,000 was used to repay previous related party advances and notes. Additional advances through May 31, 2025, totaled $441,575, bringing the outstanding balance to $1,486,575. Subsequent advances through July 10, 2025, totaled $700,000, increasing the outstanding balance to $2,186,575.
- On December 31, 2024, the company entered into debt conversion agreements with William Kerby (CEO) and Donald P. Monaco (Chairman) to convert $1.75 million in existing unsecured promissory notes into 579,469 restricted shares of Series L Preferred.
- On February 24, 2025, the company entered into debt conversion agreements with William Kerby and Donald P. Monaco to convert $500,000 in deferred salary (Mr. Kerby) and $1.0 million in existing unsecured promissory notes (Mr. Monaco) into 496,687 restricted shares of Series L Preferred.
- Preferred dividends of $64,463 for the three months ended May 31, 2025, were paid to holders of Series L and Series M Preferred stock, which include related parties.
Stakeholder Impact
- Shareholders: Face significant dilution risk from potential future equity raises and conversion of preferred stock and warrants. Current shareholders experienced a 127% increase in net loss per common share and a substantial increase in the accumulated deficit. The "going concern" warning poses a direct threat to the value of their investment.
- Employees: Benefit from expanded travel offerings (NextTrip Cruise, IHB partnership) and new platform features (PayDlay, Groups Platform, Travel Agent Platform). The integrated media strategy aims to enhance their travel planning experience.
- Customers: Benefit from expanded travel offerings (NextTrip Cruise, IHB partnership) and new platform features (PayDlay, Groups Platform, Travel Agent Platform). The integrated media strategy aims to enhance their travel planning experience.
- Suppliers: New partnerships (IHB, Expedia, Nuite, GDS, Signature Vacations) expand the company's inventory, potentially increasing business for these suppliers. However, the company's financial health could pose a risk to payment terms or future engagements.
- Creditors: Existing creditors, particularly related parties like Donald P. Monaco and entities he controls, are providing significant financing, indicating continued support but also increased exposure to the company's financial risks. The uncollectible NextPlay note highlights credit risk.
Next Steps
- Raise additional funds through equity or debt financings to support ongoing operations, increase market penetration, expand marketing and development, and cover operating costs.
- Complete the full integration of the travel and media model, with most programs expected to be delivered within 180 days of obtaining necessary funding.
- Further integrate media features with the booking system to combine travel content and itinerary management.
- Launch "My Journy" personalized travel-planning magazine.
- Introduce a multi-level Rewards program to encourage customer loyalty.
- Develop and launch a planned group chat and sharing feature for itinerary collaboration.
- Develop an AI-powered travel assistant to provide recommendations, price alerts, and support.
- Continue development of new tools for travel agents.
- Engage Save Your Day Films as an in-house production partner for exclusive media content.
Key Dates
| Date | Description |
|---|---|
| 1985-12-23 | Sigma Additive Solutions, Inc. (then Messidor Limited) initially incorporated in Nevada. |
| 2001-01-01 | Sigma Additive Solutions, Inc. changed its name to Framewaves Inc. |
| 2002-06-24 | Extraordinary Vacations USA, Inc. incorporated. |
| 2010-09-27 | Framewaves Inc. changed its name to Sigma Labs, Inc. |
| 2015-10-22 | NextTrip Holdings Inc. incorporated. |
| 2020-12-04 | SBA loan originally issued to FSA Travel, LLC with a principal amount of $50,500. |
| 2021-10-04 | FSA Travel, LLC received a modification to its SBA loan, increasing the principal amount to $199,100. |
| 2022-05-17 | Sigma Labs, Inc. began doing business as Sigma Additive Solutions. |
| 2022-08-09 | Sigma Additive Solutions changed its name to Sigma Additive Solutions, Inc. |
| 2023-01-25 | NextPlay and NTG entered into the Amended and Restated Separation Agreement, Operating Agreement, and Exchange Agreement (NextPlay Exchange Agreement). |
| 2023-10-12 | Company (then Sigma) entered into Share Exchange Agreement with NTH, NTG, and William Kerby for the NextTrip Acquisition. |
| 2023-12-28 | Company stockholders approved the adoption of the NextTrip 2023 Equity Incentive Plan. |
| 2023-12-29 | Closing of the NextTrip Acquisition, making NTH a wholly owned subsidiary of the Company. |
| 2024-01-04 | Company filed Certificate of Designation of Series F Convertible Preferred Stock. |
| 2024-01-26 | Company filed Certificate of Designation of Series G and Series H Convertible Preferred Stock. |
| 2024-02-22 | Company filed Certificate of Designation of Series I Convertible Preferred Stock. |
| 2024-03-11 | Sigma filed Certificate of Amendment to its Articles of Incorporation to change its name to NextTrip, Inc. |
| 2024-03-13 | Effective date of corporate name change from Sigma Additive Solutions, Inc. to NextTrip, Inc. |
| 2024-03-15 | All Series G Preferred shares converted into common stock. |
| 2024-05-24 | Company sold a $100,000 short-term promissory note to a private investor. |
| 2024-06-26 | Company sold a $40,000 short-term promissory note to a private investor. |
| 2024-08-15 | Company entered into a securities purchase agreement for the sale of 4,967 shares of Series I Preferred. |
| 2024-08-31 | Company entered into a securities purchase agreement for the sale of 24,834 shares of Series I Preferred. |
| 2024-09-19 | Issuance Date of Warrant for 96,774 shares to Alumni Capital LP. |
| 2024-10-01 | Company entered into a securities purchase agreement for the sale of 66,225 shares of Series I Preferred. |
| 2024-10-18 | Company sold a $154,440 short-term promissory note to 1800 Diagonal Lending LLC. |
| 2024-11-08 | Company sold a $125,190 short-term promissory note to 1800 Diagonal Lending LLC. |
| 2024-12-09 | Company and NTH entered into a Forbearance Agreement regarding Contingent Shares issuance. |
| 2024-12-31 | Company sold a $220,000 short-term promissory note to a private investor; entered into debt conversion agreements with William Kerby and Donald P. Monaco for Series L Preferred; entered into securities purchase agreement for Series J and M Preferred; issued Series K and M Preferred. |
| 2025-01-03 | Company filed Certificate of Designation of Series J, K, L, and M Nonvoting Convertible Preferred Stock. |
| 2025-01-27 | Donald P. Monaco, William Kerby, and Ian Sharpe filed a petition to force NextPlay into involuntary bankruptcy. |
| 2025-01-28 | Company entered into a securities purchase agreement for Series N Preferred and warrants. |
| 2025-01-30 | Company filed Certificate of Designation of Series N Nonvoting Convertible Preferred Stock. |
| 2025-01-31 | Amendment No. 1 to Forbearance Agreement signed, extending Forbearance Expiration Date to March 31, 2025. |
| 2025-02-04 | Company sold a $152,100 short-term promissory note to 1800 Diagonal Lending LLC. |
| 2025-02-06 | Company acquired a 49% non-controlling interest in FSA Travel, LLC; filed Certificate of Designation of Series O Nonvoting Convertible Preferred Stock. |
| 2025-02-10 | Initial Closing Date of FSA Travel, LLC acquisition. |
| 2025-02-24 | Company and Blue Fysh Holdings Inc. entered into a share exchange agreement; Company entered into debt conversion agreement with Greg Miller for Series I Preferred and warrant; Company entered into debt conversion agreements with William Kerby and Donald P. Monaco for Series L Preferred. |
| 2025-02-25 | Company filed amendment to Series I Certificate of Designation; issued Series I Preferred to IT contractor; filed Certificate of Designation of Series P Nonvoting Convertible Preferred Stock. |
| 2025-02-26 | Company entered into Equity Investment Agreement and Debt Exchange Agreement with AOS Holdings LLC for Series P Preferred and warrants. |
| 2025-02-28 | Closing of Blue Fysh Share Exchange. |
| 2025-03-25 | Company received Nasdaq approval for its initial listing application regarding Contingent Shares issuance. |
| 2025-03-26 | Company issued 4,393,993 Contingent Shares to NTG Sellers; all outstanding unvested SARs became immediately vested and exercisable. |
| 2025-03-27 | Company unveiled NextTrip Cruise, a fully integrated cruise booking engine. |
| 2025-04-01 | Company entered into asset purchase agreement with Ovation LLC for Journy.tv business; entered into Securities Purchase Agreement with Alumni Capital LP for Alumni Note and warrants; entered into License Agreement with Ovation LLC. |
| 2025-04-03 | Company entered into a strategic partnership with Intimate Hotels of Barbados (IHB). |
| 2025-04-09 | Company exercised option to purchase remaining 51% interest in FSA Travel, LLC; entered into two promissory notes with Donald P. Monaco Insurance Trust. |
| 2025-04-28 | Company paid additional $0.8 million in contingent consideration to FSA Unitholders for milestone achievement. |
| 2025-05-01 | Miller Warrant shares increased to 50,000 and exercise price decreased to $3.02 due to lack of stockholder approval by this date. |
| 2025-05-05 | Remaining 1,450,000 Contingent Shares issued to NTG Sellers upon achievement of the fourth and final business milestone. |
| 2025-05-06 | Company entered into a $3.0 million revolving Line of Credit Agreement with Monaco Investment Partners II, LP. |
| 2025-05-07 | Company issued 5,000 restricted shares of common stock to ITA as a finders fee related to the FSA acquisition. |
| 2025-05-13 | Company issued 15,000 restricted shares of common stock for a consulting contract related to a beauty and wellness FAST channel. |
| 2025-05-31 | End of the quarterly period covered by this report. |
| 2025-07-01 | Company repaid the entire outstanding principal and accrued interest of the Alumni Note. |
| 2025-07-10 | Outstanding principal balance on MIP Line of Credit reached $2,186,575. |
| 2025-07-14 | Company's Board of Directors appointed Bill Kerby and Andy Kaplan as directors (effective July 17, 2025); appointed NTH Appointees as directors (effective July 28, 2025). |
| 2025-07-15 | Date of this Quarterly Report on Form 10-Q filing. |
| 2025-07-17 | Effective date for Bill Kerby and Andy Kaplan's appointment to the Board of Directors. |
| 2025-07-28 | Effective date for Stephen Kircher, Jimmy Byrd, Carmen Diges, and David Jiang's appointment to the Board of Directors, and resignation of Salvatore Battinelli, Jacob Brunsberg, Dennis Duitch, and Kent Summers. |
| 2026-04-08 | Maturity Date of Unsecured Promissory Notes with Donald P. Monaco Insurance Trust. |
| 2026-06-25 | Maturity date of $40,000 short-term promissory note from June 26, 2024. |
| 2027-05-31 | Maturity date of the $3.0 million revolving Line of Credit Agreement with Monaco Investment Partners II, LP. |
| 2027-10-31 | Latest payment tranche for Journy.tv License Agreement fee. |
| 2028-08-24 | Expiration date of Miller Warrant. |
| 2050-12-04 | Maturity date of assumed SBA EIDL loan from FSA Travel, LLC. |
Recommendation
sellKeywords
Travel Technology, Online Travel Agency, SEC Filing, Quarterly Report, NTRP, NextTrip, Financial Performance, Going Concern, Capital Raise, Acquisitions, Preferred Stock, Warrants, Stock Options, Corporate Governance, Risk Factors, Travel Industry, Media Platform, Journy.tv, FSA Travel, Blue Fysh, Monaco Investment Partners
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