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Stockholders’ Equity
 12 Months Ended
Feb. 28, 2025
Equity [Abstract]  
Stockholders’ Equity

NOTE 18 – Stockholders’ Equity

 

Common Stock

 

The Company has 250,000,000 shares of common stock authorized. As of February 28, 2025 and February 29, 2024, the Company had 1,656,738 and 936,430 shares of common stock, par value $0.001 issued and outstanding, respectively. All shares have equal voting rights, are fully-paid and non-assessable, and are entitled to one vote per share.

 

On September 22, 2023, we effected a 1-for-20 reverse stock split of the outstanding shares of our common stock and a corresponding decrease in the number of shares of our common stock that we are authorized to issue. In connection with the reverse split, we issued 40,197 common shares to round-up fractional shares to the nearest whole share.

 

The effects of the reverse stock split have been retroactively reflected in all periods presented in this Report.

 

Fiscal Year Ended February 28, 2025

 

On March 15, 2024, the Company issued 409,502 shares of common stock pursuant to automatic conversions of the Company’s Series G, H, and I Convertible Preferred Stock upon receiving shareholder approval to increase the Company’s authorized common shares to 250 million.

 

In July 2024 and August 2024, the Company issued 42,709 shares of common stock to Dooya Media Group, Inc. as partial compensation for development work related to Compass.TV, the Company’s Free-Ad Supported TV (“FAST”) channel.

 

On September 19, 2024, the Company issued 32,786 shares of common stock to Alumni Capital LP (“Alumni”) as commitment shares for a $10 million equity line of credit.

 

On October 8, 2024, the Company issued 8,065 shares of common stock to FSA upon executing a non-binding letter of intent to acquire interests in FSA. Pursuant to the terms of the agreement, the shares were to be credited towards the final purchase price if an acquisition occurs, and as a down payment towards the acquisition price of FSA.

 

On December 16, 2024, the Company issued 28,281 shares of common stock to Out of the Box Capital as a prepayment for an Investor Relations consulting contract.

 

In December 2024 and January 2025, the Company issued an aggregate of 104,965 shares of common stock pursuant to warrant exercises, resulting in gross proceeds of $316,995.

 

On January 7, 2025, the Company issued 30,000 shares of common stock as a prepayment for a consulting contract with an investor relations company.

 

On January 29, 2025, the Company issued 4,000 shares of common stock to Lyndsey North, the Company’s former President, in connection with her separation agreement.

 

On February 26, 2025, the Company issued 60,000 shares of common stock to AOS Holdings, Inc. as a partial prepayment for a two-year consulting contract to provide investor relations and strategic consulting services.

 

Fiscal Year Ended February 29, 2024

 

In September 2023 and October 2023, the Company sold 72,721 and 128,887 shares of common stock, respectively, through our ATM Agreement, resulting in net proceeds of $364,555 and $772,468, respectively.

 

 

On December 29, 2023, the Company acquired 100% of the outstanding equity interests of NTH pursuant to the Exchange Agreement in connection with the NextTrip Acquisition. As consideration for the NextTrip Acquisition, at closing the Company issued 156,007 restricted shares of its common stock as Closing Shares, constituting 19.99% of its issued and outstanding shares of common stock immediately prior to execution of the Exchange Agreement, and agreed to issue up to an aggregate of 5,843,993 Contingent Shares as further consideration upon NTH’s achievement of certain milestones set forth in the Exchange Agreement.

 

Of the 156,007 restricted shares issued at closing, 52,818 shares were issued pursuant to the Debt Assignment and Conversion agreements, 15,481 shares were issued pursuant to the Share Purchase and Pre-Acquisition Exchange Agreements, and 4,337 shares were issued to a third-party consultant. Pursuant to ASC 805-40-45-1, the remaining 83,371 Closing Shares are reflected as a retroactive adjustment to adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree. That adjustment is required to reflect the capital of the legal parent.

 

Deferred Compensation

 

As discussed above, during the fiscal year ended February 28, 2025, the Company issued 4,000 restricted shares of common stock at a price of $6.69 to Lyndsey North, the Company’s former President, in connection with her separation agreement. The shares were fully vested on January 29, 2025, which was the grant date. As a result, the Company recorded share based compensation expense of $26,760. The Company did not issue any shares of common stock to employees during the fiscal year ended February 29, 2024.

 

Preferred Stock

 

Under our amended and restated articles of incorporation (our “Charter”), our board of directors has the authority, without further action by stockholders, to designate one or more series of preferred stock and to fix the voting powers, designations, preferences, limitations, restrictions and relative rights granted to or imposed upon the preferred stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference and sinking fund terms, any or all of which may be preferential to or greater than the rights of the common stock.

 

Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock.

 

The Company is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value. 3,106,616 and 472,996 shares of preferred stock were issued and outstanding at February 28, 2025 and February 29, 2024, Respectively, as discussed in additional detail below.

 

Series E Convertible Preferred Stock

 

Under the Certificate of Designations of the Series E Preferred Stock, the shares of the Company’s preferred stock as Series E Convertible Preferred Stock (the “Series E Preferred”) have an initial stated value of $1,500 per share (the “Stated Value”). Dividends at the initial rate of 9% per annum will accrue and, on a monthly basis, shall be payable in kind by the increase of the Stated Value of the Series E Preferred by said amount. The holders of shares of the Series E Preferred have the right at any time to convert all or a portion of the Series E Preferred (including, without limitation, accrued and unpaid dividends and make-whole dividends through the third anniversary of the closing date) into shares of the Company’s common stock at an initial conversion rate determined by dividing the Conversion Amount by the conversion price ($0.13 above the consolidated closing bid price for the trading day prior to the execution of the relates stock purchase agreement). The Conversion Amount is the sum of the Stated Value of the shares of Series E Preferred then being converted plus any other unpaid amounts payable with respect to the Series E Preferred being converted plus the “Make Whole Amount” (the amount of any dividends that, but for the conversion, would have accrued at the dividend rate for the period through the third anniversary of the initial issuance date). The Conversion Rate is also subject to adjustment for stock splits, dividends recapitalizations and similar events.

 

At February 28, 2025, 316 shares of Series E Preferred were outstanding, which if converted as of February 28, 2025, including the make-whole dividends, would have resulted in the issuance of 3,362 shares of common stock.

 

 

Series F Convertible Preferred Stock

 

On January 4, 2024, the Company filed a Certificate of Designation of Series F Convertible Preferred Stock (the “Series F Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 5,843,993 shares of the Company’s preferred stock as Series F Convertible Preferred Stock, par value $0.001 per share (the “Series F Preferred”). The Series F Preferred was designated by the Company in connection with the NextTrip Acquisition, and, in the event that the Company does not have sufficient shares of common stock available to fulfill its obligations pursuant to the Exchange Agreement governing the terms of the NextTrip Acquisition, shares of Series F Preferred shall be issued to the previous equity holders of NTH in lieu of shares of Company common stock.

 

The terms and conditions set forth in the Series F Certificate of Designation are summarized below:

 

Ranking. The Series F Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series F Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Company’s Charter or as otherwise required by the Nevada Revised Statutes, holders of Series F Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series F Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series F Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series F Preferred or alter or amend the Series F Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series F Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding Series F Preferred, each outstanding share of Series F Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series F Conversion Ratio”).

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary (each, a “Liquidation”), holders of Series F Preferred will be entitled to participate, on an as-converted-to-common stock basis calculate based on the Series F Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

At February 28, 2025, no shares of the Series F Preferred were outstanding.

 

Series G Convertible Preferred Stock

 

On January 26, 2024, the Company filed a Certificate of Designation of Series G Convertible Preferred Stock (the “Series G Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 100,000 shares of the Company’s preferred stock as Series G Convertible Preferred Stock, par value $0.001 per share (the “Series G Preferred”).

 

The terms and conditions set forth in the Series G Certificate of Designation are summarized below:

 

Ranking. The Series G Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series G Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Company’s Charter or as otherwise required by the Nevada Revised Statutes, holders of Series G Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series G Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series G Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series G Preferred or alter or amend the Series G Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series G Preferred, or (c) enter into any agreement with respect to the foregoing.

 

 

Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding Series G Preferred, each outstanding share of Series G Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series G Conversion Ratio”).

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series G Preferred will be entitled to participate, on an as-converted-to-common stock basis calculate based on the Series G Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

Redemption Right. The Company shall have the right to redeem up to 50% of the Series G Preferred for an aggregate price of $1.00 in accordance with the terms of the Perpetual License Agreement.

 

The Company did not exercise its option to repurchase up to 50% of the Series G Preferred, and all such shares were converted to common stock on March 15, 2024. At February 28, 2025, no shares of the issued Series G Preferred were outstanding.

 

Series H Convertible Preferred Stock

 

On January 26, 2024, the Company filed a Certificate of Designation of Series H Convertible Preferred Stock (the “Series H Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 150,000 shares of the Company’s preferred stock as Series H Preferred Stock, par value $0.001 per share (the “Series H Preferred”).

 

The terms and conditions set forth in the Series H Certificate of Designation are summarized below:

 

Ranking. The Series H Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series H Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Company’s Charter or as otherwise required by the Nevada Revised Statutes, holders of Series H Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series H Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series H Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series H Preferred or alter or amend the Series H Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series H Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding Series H Preferred, each outstanding share of Series H Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series H Conversion Ratio”).

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series H Preferred will be entitled to participate, on an as-converted-to-common stock basis calculate based on the Series H Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

At February 28, 2025, 33,000 shares of the issued Series H Preferred were outstanding, which if converted as of February 28, 2025, would have resulted in the issuance of 33,000 shares of common stock.

 

 

Series I Convertible Preferred Stock

 

On February 22, 2024, the Company filed a Certificate of Designation of Series I Convertible Preferred Stock (the “Initial Series I Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 331,124 shares of the Company’s preferred stock as Series I Convertible Preferred Stock, par value $0.001 per share (the “Series I Preferred”). On February 25, 2025, the Company filed an amendment to the Certificate of Designation of Series I Convertible Preferred Stock (the “Amendment to Series I Certificate of Designation,” and together with the Initial Series I Certificate of Designation, the “Series I Certificate of Designation”) with the Secretary of State of the State of Nevada, to increase the number of shares of the Company’s preferred stock designated as Series I Preferred to 692,945 shares.

 

The terms and conditions set forth in the Series I Certificate of Designation are summarized below:

 

Ranking. The Series I Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series I Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series I Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series I Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series I Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series I Preferred or alter or amend the Series I Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series I Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding shares of Series I Preferred, each outstanding share of Series I Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series I Conversion Ratio”).

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series I Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series I Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On February 15, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company issued and sold an aggregate of $672,500 of the Company’s securities, consisting of (i) 222,680 restricted shares of Series I Preferred, and (ii) unregistered warrants to purchase up to 111,340 shares of Company common stock at a combined price of $3.02.

 

On August 15, 2024, the Company entered into a securities purchase agreement with an investor for the sale of 4,967 shares of Series I Preferred, at $3.02 per share, resulting in gross proceeds to the Company of $15,000.

 

On August 31, 2024, the Company entered into a securities purchase agreement with an investor for the sale of 24,834 shares of Series I Preferred at $3.02 per share, resulting in gross proceeds to the Company of $75,000.

 

On October 1, 2024, the Company entered into a securities purchase agreement with an investor for the sale of 66,225 shares of Series I Preferred at $3.02 per share, resulting in gross proceeds to the Company of $200,000.

 

On February 24, 2025, the Company entered into a securities purchase agreement (the “Series I Purchase Agreement”) with certain accredited investors (the “Purchasers”), pursuant to which the Company issued and sold an aggregate of 331,125 restricted shares of Series I Preferred Stock to the Purchasers at a purchase price of $3.02 per share (the “Series I Offering”), resulting in aggregate gross proceeds to the Company of $1,000,000. In addition, the Company issued 10,000 shares of Series I Preferred at $3.02 per share to an outside contractor as payment for outstanding invoices.

 

 

On February 24 2025, the Company entered into a debt conversion agreement with Greg Miller, an independent contractor of the Company, whereby Mr. Miller and the Company agreed to convert $100,000 in deferred consulting fees owed to Mr. Miller into 33,113 shares of Series I Preferred, at a conversion price of $3.02 per share, and a warrant to purchase 33,113 shares of common stock (the “Miller Warrant”). The Miller Warrant has an exercise price of $4.00 per share, becomes exercisable six months from the issuance date (subject to stockholder approval of removal of the Exchange Cap), and shall expire three years from the initial exercise date (August 24, 2028).

 

The Series I Preferred shall not be convertible and the Miller Warrant shall be not exercisable into shares of common stock until such date that the Company obtains stockholder approval to remove the Exchange Cap (as described below).

 

At February 28, 2025, 500,442 shares of the Series I Preferred were outstanding, which if converted as of February 28, 2025, would have resulted in the issuance of 500,442 shares of common stock.

 

Series J Nonvoting Convertible Preferred Stock

 

On January 3, 2025, the Company filed a Certificate of Designation of Series J Nonvoting Convertible Preferred Stock (the “Series J Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 297,788 shares of the Company’s preferred stock as Series J Nonvoting Convertible Preferred Stock, par value $0.001 per share (the “Series J Preferred”).

 

The terms and conditions set forth in the Series J Certificate of Designation are summarized below:

 

Ranking. The Series J Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series J Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series J Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series J Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series J Preferred or alter or amend the Series J Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series J Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series J Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series J Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series J Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series J Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series J Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On December 31, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company issued and sold an aggregate of 231,788 restricted shares of Series J Preferred, at a purchase price of $3.02 per share, resulting in gross proceeds to the Company of $700,000. In addition, the Company issued a total of 66,000 shares of Series J Preferred to four consultants for investor relations services.

 

The Series J Preferred shall be convertible into the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.

 

At February 28, 2025, 297,788 shares of the Series J Preferred were outstanding, which if converted as of February 28, 2025, would have resulted in the issuance of 297,788 shares of common stock.

 

Series K Nonvoting Convertible Preferred Stock

 

On January 3, 2025, the Company filed a Certificate of Designation of Series K Nonvoting Convertible Preferred Stock (the “Series K Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 60,595 shares of the Company’s preferred stock as Series K Nonvoting Convertible Preferred Stock, par value $0.001 per share (the “Series K Preferred”).

 

The terms and conditions set forth in the Series K Certificate of Designation are summarized below:

 

Ranking. The Series K Preferred rank pari passu to the Company’s common stock.

 

 

Dividends. Holders of Series K Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series K Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series K Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series K Preferred or alter or amend the Series K Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series K Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series K Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series K Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series K Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series K Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series K Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On December 31, 2024, the Company issued an aggregate of 60,595 shares of Series K Preferred to a series of investors at a price of $3.02 per share as prepaid guaranteed interest in connection with the sale of an aggregate of $1,220,000 in promissory notes.

 

The Series K Preferred shall be convertible into the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.

 

At February 28, 2025, 60,595 shares of the Series K Preferred were outstanding, which if converted as of February 28, 2025, would have resulted in the issuance of 60,595 shares of common stock.

 

Series L Nonvoting Convertible Preferred Stock

 

On January 3, 2025, the Company filed a Certificate of Designation of Series L Nonvoting Convertible Preferred Stock (the “Initial Series L Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 579,469 shares of the Company’s preferred stock as Series L Nonvoting Convertible Preferred Stock, par value $0.001 per share(the “Series L Preferred”). On February 25, 2025, the Company filed an amendment to the Initial Series L Certificate of Designation (the “Series L Preferred Amendment,” and together with the Initial Series L Certificate of Designation, the “Series L Certificate of Designation”) with the Secretary of State of the State of Nevada, to increase the number of shares of the Company’s preferred stock designated as Series L Preferred to 1,076,158 shares.

 

The terms and conditions set forth in the Series L Certificate of Designation are summarized below:

 

Ranking. The Series L Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series L Preferred will be entitled to dividends, if, as and when declared by the Board out of funds at the time legally available therefor, dividends in the amount of 12% per annum per share of Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock), and no more. Dividends on the Preferred Stock shall be fully cumulative, shall accrue without interest and without compounding from the date of first issuance, and shall, if declared by the Board, be payable quarterly in arrears on March 1, June 1, September 1 and December of each year. All dividends on the Preferred Stock shall be payable (i) in shares of Common Stock of the Company at the Nasdaq Closing Price; provided, however, that such prices shall not be less than $3.02 per share, or (ii) cash, at the election of a majority of the independent directors. Any dividend which shall not be paid on required dividend date on which it shall become due shall be deemed to be “past due” until such dividend shall be paid or until the share of Preferred Stock with respect to which such dividend became due shall no longer be outstanding, whichever is the earlier to occur. In the event that any dividend becomes “past due” the per annum rate shall increase to 14%.

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series L Preferred are not entitled to voting rights However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series L Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series L Preferred or alter or amend the Series L Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series L Preferred, or (c) enter into any agreement with respect to the foregoing.

 

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series L Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series L Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series L Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series L Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series L Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On December 31, 2024, the Company entered into debt conversion agreements with its chief executive officer, William Kerby, and chairman of the board, Donald P. Monaco (the “Related Parties”), whereby the Related Parties and the Company agreed to convert $1.75 million in existing unsecured promissory notes owed to the Related Parties for monies advanced to the Company into an aggregate of 579,469 restricted shares of Series L Preferred, at a purchase price of $3.02 per share.

 

On February 24, 2025, the Company entered into debt conversion agreements with its chief executive officer, William Kerby, and chairman of the board, Donald P. Monaco, whereby the Related Parties and the Company agreed to convert $500,000 in deferred salary (Mr. Kerby) and $1.0 million in existing unsecured promissory notes owed for monies advanced to the Company (Mr. Monaco), respectively, into an aggregate of 496,687 restricted shares of Series L Preferred at a conversion price of $3.02 per share.

 

The Series L Preferred shall be convertible into the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap (as described below), subject to beneficial ownership limitations.

 

At February 28, 2025, 1,076,156 shares of the Series L Preferred were outstanding, which if converted as of February 28, 2025, would have resulted in the issuance of 1,076,156 shares of common stock.

 

Series M Nonvoting Convertible Preferred Stock

 

On January 3, 2025, the Company filed a Certificate of Designation of Series M Nonvoting Convertible Preferred Stock (the “Series M Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 165,562 shares of the Company’s preferred stock as Series M Nonvoting Convertible Preferred Stock, par value $0.001 per share (the “Series M Preferred”).

 

The terms and conditions set forth in the Series M Certificate of Designation are summarized below:

 

Ranking. The Series M Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series M Preferred will be entitled to dividends, if, as and when declared by the Board out of funds at the time legally available therefor, dividends in the amount of 12% per annum per share of Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock), and no more. Dividends on the Preferred Stock shall be fully cumulative, shall accrue without interest and without compounding from the date of first issuance, and shall, if declared by the Board, be payable quarterly in arrears on March 1, June 1, September 1 and December of each year. All dividends on the Preferred Stock shall be payable (i) in shares of Common Stock of the Company at the Nasdaq Closing Price; provided, however, that such prices shall not be less than $3.02 per share, or (ii) cash, at the election of a majority of the independent directors. Any dividend which shall not be paid on required dividend date on which it shall become due shall be deemed to be “past due” until such dividend shall be paid or until the share of Preferred Stock with respect to which such dividend became due shall no longer be outstanding, whichever is the earlier to occur. In the event that any dividend becomes “past due” the per annum rate shall increase to 14%.

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series M Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series M Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series M Preferred or alter or amend the Series M Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series M Preferred, or (c) enter into any agreement with respect to the foregoing.

 

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series M Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series M Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series M Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series M Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series M Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On December 31, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company may issue and sell up to $500,000 of restricted shares of Series M Preferred, at a purchase price of $3.02 per share.

 

In addition, as part of the Series M Preferred offering, on December 31, 2024, the Company entered into a debt conversion agreement with an existing lender whereby the lender and the Company agreed to convert $350,000 in existing unsecured promissory notes plus accrued interest owed to the lender for monies advanced to the Company into shares of Series M Preferred.

 

The Series M Preferred shall be convertible into the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.

 

On December 31, 2024, in connection with the foregoing, the Company issued 133,278 shares of Series M Preferred to an investor pursuant to a debt conversion agreement.

 

At February 28, 2025, all 133,278 shares of the Series M Preferred were outstanding, which if converted as of February 28, 2025, would have resulted in the issuance of 133,278 shares of common stock.

 

Series N Nonvoting Convertible Preferred Stock

 

On January 30, 2025, the Company filed a Certificate of Designation of Series N Convertible Preferred Stock (the “Series N Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 500,000 shares of the Company’s preferred stock as Series N Convertible Preferred Stock, par value $0.001 per share (the “Series N Preferred”).

 

The terms and conditions set forth in the Series N Certificate of Designation are summarized below:

 

Ranking. The Series N Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series N Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Series N Certificate of Designation, or as otherwise required by the Nevada Revised Statutes, holders of Series N Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series N Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series N Preferred or alter or amend the Series N Certificate of Designation, (ii) amend its amended and restated articles of incorporation, amended and restated bylaws or other charter documents in any manner that adversely effects any rights of the holders of the Series N Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series N Preferred into shares of common stock in accordance with the listing rules of Nasdaq, each outstanding share of Series N Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series N Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series N Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series N Conversion Ratio (as defined in the Series N Certificate of Designation), with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On January 28, 2025, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company issued and sold the purchaser (i) 17,000 restricted shares of Series N Preferred and (ii) warrants to purchase 17,000 shares of Company common stock, at a combined purchase price of $5.00 per share and warrant, resulting in gross proceeds to the Company of $85,000.

 

 

On February 24, 2025, the Company and Blue Fysh Holdings Inc. (“Blue Fysh”) entered into a share exchange agreement (the “BF Share Exchange Agreement”) whereby Blue Fysh agreed to issue 82 restricted shares of its common stock to the Company, representing a ten percent (10%) interest in Blue Fysh, in exchange for 483,000 restricted shares of Series N Preferred at an issuance price of $5.00 per share (the “BF Share Exchange”). The BF Share Exchange closed on February 28, 2025.

 

The Series N Preferred shall be convertible into the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.

 

At February 28, 2025, 500,000 shares of the Series N Preferred were outstanding, which if converted as of February 28, 2025, would have resulted in the issuance of 500,000 shares of common stock.

 

Series O Nonvoting Convertible Preferred Stock

 

On February 6, 2025, the Company filed a Certificate of Designation of Series O Nonvoting Convertible Preferred Stock (the “Series O Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 451,614 shares of the Company’s preferred stock as Series O Nonvoting Convertible Preferred Stock, par value $0.001 per share (the “Series O Preferred”).

 

The terms and conditions set forth in the Series O Certificate of Designation are summarized below:

 

Ranking. The Series O Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series O Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Series O Certificate of Designation, or as otherwise required by the Nevada Revised Statutes, holders of Series O Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series O Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series O Preferred or alter or amend the Series O Certificate of Designation, (ii) amend its amended and restated articles of incorporation, amended and restated bylaws or other charter documents in any manner that adversely effects any rights of the holders of the Series O Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series O Preferred into shares of common stock in accordance with the listing rules of Nasdaq, each outstanding share of Series O Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series O Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series O Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series O Conversion Ratio (as defined in the Series O Certificate of Designation), with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On February 6, 2025, in connection with the initial 49% acquisition of FSA, the Company issued 161,291 shares of Series O Preferred to FSA.

 

The shares of Series O Preferred issued and issuable cannot be converted into shares of Company common stock unless and until the Company’s stockholders approve the conversion of Series O Preferred into shares of common stock in accordance with the listing rules of Nasdaq. Upon receipt of such approvals, the share of Series O Preferred outstanding as of such date shall automatically convert into shares of Company common stock, subject to applicable beneficial ownership limitations.

 

At February 28, 2025, 161,291 shares of the Series O Preferred were outstanding, which if converted as of February 28, 2025, would have resulted in the issuance of 161,291 shares of common stock

 

Series P Nonvoting Convertible Preferred Stock

 

On February 25, 2025, the Company filed a Certificate of Designation of Series P Nonvoting Convertible Preferred Stock (the “Series P Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 343,750 shares of the Company’s preferred stock as Series P Nonvoting Convertible Preferred Stock, par value $0.001 per share (the “Series P Preferred”).

 

 

The terms and conditions set forth in the Series P Certificate of Designation are summarized below:

 

Ranking. The Series P Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series P Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series P Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series P Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series P Preferred or alter or amend the Series P Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series P Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series P Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series P Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series P Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series P Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series P Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On February 26, 2025, the Company entered into an Equity Investment Agreement with AOS Holdings LLC (“AOS”), pursuant to which the Company issued and sold to AOS (i) 93,750 restricted shares of Series P Preferred, (ii) a warrant exercisable in cash to purchase up to 375,000 shares of common stock (the “Cash Warrant”), and (iii) a warrant exercisable in either cash or via cashless exercise (the “Cashless Warrant”) to purchase up to 375,000 shares of common stock, for a combined purchase price of $4.00 per share, resulting in gross proceeds to the Company of $375,000.

 

On February 26, 2025, the Company entered into a Debt Exchange Agreement with AOS whereby AOS and the Company agreed to convert $1,000,000 owed to AOS under an existing unsecured promissory note owed for monies advanced to the Company into 250,000 shares of Series P Preferred at a conversion price of $4.00 per share.

 

The Series P Preferred shall be convertible into the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap (as described below), subject to beneficial ownership limitations.

 

At February 28, 2025, 343,750 shares of the Series P Preferred were outstanding, which if converted as of February 28, 2025, would have resulted in the issuance of 343,750 shares of common stock.

 

Stock Options

 

On December 28, 2023, at the Annual Meeting of Stockholders of the Company, the Company’s stockholders approved the adoption of the NextTrip 2023 Equity Incentive Plan (the “2023 Plan”). 7,000,000 shares of common stock have been reserved for issuance under the 2023 Plan, and as of February 28, 2025, all such shares are available for issuance.

 

As of February 28, 2025, we had outstanding options under our 2013 Equity Incentive Plan (the “2012 Plan”) to purchase an aggregate of 76,342 shares of our common stock at a weighted-average exercise price of $52.69 per share.

 

During fiscal year 2025, the Company did not grant any options. In fiscal year 2025, 3,101 options vested and $41,114 of compensation cost was recognized during the year. At February 28, 2025, there are vested options exercisable for 75,992 shares of common stock. No options to purchase shares of common stock were exercised during the fiscal year ended February 28, 2025.

 

 

The Company generally grants stock options to employees, consultants and directors at exercise prices equal to the fair market value of the Company’s stock on the dates of grant. Stock options are typically granted throughout the year and generally vest over three years of service and expire five years from the date of the award, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award.

 

Upon closing of the NextTrip Acquisition on December 29, 2023, the Company assumed options to purchase up to 86,402 shares of common stock. Between December 29, 2023 and February 29, 2024, 1,342 options were forfeited or expired and no options were issued or exercised.

 

Total employee share-based compensation expense for the year ended February 28, 2025 was $67,874, of which $41,114 was related to stock options. There was no capitalized share-based compensation cost as of February 28, 2025, and there were no recognized tax benefits during the fiscal year ended February 28, 2025.

 

To estimate the value of an option award, the Company uses the Black-Scholes option-pricing model. This model requires inputs such as expected life, expected volatility and risk-free interest rate. The forfeiture rate also impacts the amount of aggregate compensation. These inputs are subjective and generally require significant analysis and judgment to develop. While estimates of expected life, volatility and forfeiture rate are derived primarily from the Company’s historical data, the risk-free rate is based on the yield available on U.S. Treasury constant maturity rates with similar terms to the expected term of the stock option awards. The fair value of outstanding stock option awards at February 28, 2025 was estimated using the Black-Scholes model with the following weighted-average assumptions at the date of grant:

 

Option activity for the year ended February 28, 2025 was as follows:

 

       Weighted Average   Weighted Average     
       Exercise   Remaining   Aggregate 
       Price   Contractual   Intrinsic 
   Options   ($)   Life (Yrs.)   Value ($) 
Options outstanding at February 29, 2024   85,300    60.50    2.52        - 
Exercised   -    -    -    - 
Forfeited or cancelled   (8,958)   125.65    -    - 
Options outstanding at February 28, 2025   76,342    52.69    1.60    - 
Options expected to vest in the future as of February 28, 2025   350    50.00    2.34    - 
Options exercisable at February 28, 2025   75,992    52.71    1.59    - 
Options vested, exercisable, and options expected to vest at February 28, 2025   76,342    52.69    1.60    - 

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock for those awards that have an exercise price below the $3.98 closing price of our Common Stock on February 28, 2025. All of the outstanding option grants have an exercise price above $3.98.

 

At February 28, 2025, there was $5,260 of unrecognized share-based compensation expense related to unvested stock options with a weighted average remaining recognition period of 0.34 years.

 

Stock Appreciation Rights

 

The purposes of the 2020 Stock Appreciation Rights Plan (the “2020 SARs Plan”) are to: (i) enable the Company to attract and retain the types of employees, consultants, and directors (collectively, “Service Providers”) who will contribute to the Company’s long-range success; (ii) provide incentives that align the interests of Service Providers with those of the shareholders of the Company; and (iii) promote the success of the Company’s business. The 2020 SARs Plan provides for incentive awards that are only made in the form of stock appreciation rights payable in cash (“SARs”). No shares of common stock were reserved in connection with the adoption of the 2020 SARs Plan since no shares will be issued pursuant to the 2020 SARs Plan.

 

 

SARs may be granted to any Service Provider. A SAR is the right to receive an amount equal to the Spread with respect to a share of the Company’s common stock (a “Share”) upon the exercise of the SAR. The “Spread” is the difference between the exercise price per share specified in a SAR agreement on the date of grant and the fair market value per share on the date of exercise of the SAR. The exercise price per share will not be less than 100% of the fair market value of a Share on the date of grant of the SAR. The administrator of the 2020 SARs Plan will have the authority to, among other things, prescribe the terms and conditions of each SAR, including, without limitation, the exercise price and medium of payment and vesting provisions, and to specify the provisions of the SAR agreement relating to such grant.

 

Upon closing of the NextTrip Acquisition on December 29, 2023, the Company assumed 40,390 outstanding SARs. Between December 29, 2023 and February 29, 2024, none were forfeited or expired and no SARs were issued or exercised.

 

The Company recognizes compensation expense and a corresponding liability for the fair value of the SARs over the requisite service period for each SAR award. The SAR’s are revalued at each reporting date in accordance with ASC 718 “Compensation-Stock Compensation”, and any changes in fair value are reflected in income as of the applicable reporting date.

 

The fair value of outstanding SAR awards was estimated using the Black-Scholes model with the following assumptions for the twelve months ended February 28, 2025:

 

Assumptions:

 

   2025 
Dividend yield   0.0%
Risk-free interest rate   2.3%-5.25%
Expected volatility   96.5%-187.8%
Expected life (in years)   0.16-2.08 

 

SARs activity for the year ended February 28, 2025 was as follows:

 

       Weighted Average   Weighted Average     
       Exercise   Remaining   Aggregate 
       Price   Contractual   Intrinsic 
   SARs   ($)   Life (Yrs.)   Value ($) 
SARs outstanding at February 29, 2024   40,390    44.77    2.99          - 
Exercised   -    -    -    - 
Forfeited or cancelled   (167)   37.4    -    - 
SARs outstanding February 28, 2025   40,223    44.80    1.99    - 
SARs expected to vest in the future as of February 28, 2025   5,213    27.66    1.93    - 
SARs exercisable at February 28, 2025   35,010    47.35    2.34    - 
SARs vested, exercisable, and options expected to vest at February 28, 2025   40,223    44.80    1.99    - 

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock for those awards that have an exercise price below the $3.98 closing price of our common stock on February 28, 2025. All the SARs have an exercise price above $3.98.

 

For the year ended February 28, 2025, $67,874 of share-based compensation expense was recognized, and at February 28, 2025, there was $119 of unrecognized share-based compensation expense related to unvested SARs with a weighted average remaining recognition period of 0.26 years.

 

Warrants

 

At February 28, 2025, the Company had outstanding warrants to purchase a total of 3,015,885 shares of common stock. The warrants have exercise prices that range from $3.02 to $350.00, which if not exercised, will expire between July 26, 2025 and August 24, 2030.

 

 

The fair value of warrants issued during the year was estimated using the Black-Scholes model with the following assumptions for the twelve months ended February 28, 2025:

 

Assumptions:

 

   2025 
Dividend yield   0.0%
Risk-free interest rate   3.5%-4.3%
Expected volatility   127.1%-159.4%
Expected life (in years)   1.5-5.0 

 

Warrant activity for the year ended February 28, 2025 was as follows:

 

       Weighted Average  

Weighted

Average

 
       Exercise   Remaining 
       Price   Contractual 
   Warrants   ($)   Life (Yrs.) 
Warrants outstanding at February 29, 2024   486,165    9.94    1.96 
Granted   2,637,887    4.80    4.24 
Exercised   (104,965)   3.02    - 
Forfeited or cancelled   (3,202)   -    - 
Warrants outstanding at February 28, 2025   3,015,885    5.36    3.84 

 

For further information regarding the allocation of the relative fair values of warrants issued in connection with short-term promissory notes, see NOTE 12- Notes Payable.