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Stockholders’ Equity
 9 Months Ended
Nov. 30, 2024
Equity [Abstract]  
Stockholders’ Equity

NOTE 8 - Stockholders’ Equity

 

Common Stock

 

On March 8, 2024, at a special meeting of stockholders, the Company received approval to increase its authorized shares of common stock from 1,200,000 to 250,000,000 (the “Increase in Authorized”). On March 11, 2024, the Company filed a Certificate of Amendment to its amended and restated articles of incorporation, as amended, with the Secretary of State of the State of Nevada, pursuant to which, effective as of 12:01 a.m. Pacific time on March 13, 2024, the Increase in Authorized was implemented.

 

In the first fiscal quarter of 2025, the Company issued 100,000 shares of common stock upon conversion of 100,000 shares of Series G Convertible Preferred Stock, 117,000 shares of common stock upon conversion of 117,000 shares of Series H Convertible Preferred Stock, and 192,502 shares of common stock upon conversion of 192,502 shares of Series I Convertible Preferred Stock.

 

In the second fiscal quarter of 2025, the Company issued 42,709 shares of common stock to a service provider as partial compensation for development work related to Compass.TV, the Company’s Free-Ad Supported TV (“FAST”) channel.

 

In the third fiscal quarter of 2025, the Company issued 32,786 shares of common stock as commitment shares for its $10 million Equity Line of Credit and 8,065 common shares as a deposit for the potential acquisition of Five Star Alliance.

 

Preferred Stock

 

Under our amended and restated articles of incorporation, as amended (“Articles”), 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. An aggregate of 225,520 and 472,996 shares of preferred stock were issued and outstanding at November 30, 2024 and February 29, 2024, respectively.

 

Series E Convertible Preferred Stock

 

Under the Certificate of Designations for the Series E Preferred Stock, the Series E Preferred Shares 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 Stock by said amount. The holders of the Series E Preferred Shares have the right at any time to convert all or a portion of the Series E Preferred Shares (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 Series E Preferred Shares then being converted plus any other unpaid amounts payable with respect to the Series E Preferred Shares 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 November 30, 2024, 316 shares of the issued Series E Convertible Preferred Stock were outstanding, which if converted as of November 30, 2024, including the make-whole dividends, would have resulted in the issuance of 3,310 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 its acquisition of NextTrip, and, in the event that the Company does not have sufficient shares of common stock available to fulfill its obligations pursuant to the Share Exchange Agreement governing the terms of the acquisition, shares of Series F Preferred shall be issued to the previous equity holders of NextTrip 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 Articles, 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 Articles or other charter documents in any manner that adversely effects any rights of the holders of the Series F Preferred, or (iii) enter into any agreement with respect to the foregoing.

 

 

Conversion. On such date that the Company amends its Articles 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 “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 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 November 30, 2024, no shares of the Series F Convertible Preferred Stock 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 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 Articles 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 Articles or other charter documents in any manner that adversely effects any rights of the holders of the Series G Preferred, or (iii) enter into any agreement with respect to the foregoing.

 

Conversion. On such date that the Company amends its Articles 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 Stock for an aggregate price of $1.00 in accordance with the terms of the Perpetual License Agreement.

 

At November 30, 2024, no shares of the issued Series G Convertible Preferred Stock 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 Articles 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 Articles or other charter documents in any manner that adversely effects any rights of the holders of the Series H Preferred, or (iii) enter into any agreement with respect to the foregoing.

 

Conversion. On such date that the Company amends its Articles 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 November 30, 2024, 33,000 shares of the issued Series H Convertible Preferred Stock were outstanding, which if converted as of November 30, 2024, 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 “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”).

 

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 Articles, 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 Articles or other charter documents in any manner that adversely effects any rights of the holders of the Series I Preferred, or (iii) enter into any agreement with respect to the foregoing.

 

 

Conversion. On such date that the Company amends its Articles 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 August 15, 2024, the Company entered into a securities purchase agreement with an investor for the sale of 4,967 shares of Series I Convertible Preferred Stock, 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 Convertible Preferred Stock 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 Convertible Preferred Stock at $3.02 per share, resulting in gross proceeds to the Company of $200,000.

 

Between October 30, 2024 and November 5, 2024, the Company issued 66,000 shares of Series I Convertible Preferred Stock to third parties in connection with investor relations services.

 

At November 30, 2024, 192,204 shares of the issued Series I Convertible Preferred Stock were outstanding, which if converted as of November 30, 2024, would have resulted in the issuance of 192,204 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 November 30, 2024, all of such shares are available for issuance.

 

The Company’s 2013 Equity Incentive Plan expired on March 15, 2023. As such, no new grants may be made under the 2013 Plan. At November 30, 2024, there were 76,367 shares of common stock reserved for issuance upon exercise of outstanding stock options issued under the 2013 Plan prior to its expiration, and an additional 2,500 shares reserved for issuance pursuant to outstanding inducement options.

 

There were no issuances of stock options for the nine months ended November 30, 2024 or November 30, 2023.

 

The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company’s common stock on the grant date, but not less than 100% of the fair market value. Stock options are typically granted throughout the year and generally vest over a period from one to three years of service and expire five years from the grant date, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the vesting period for each stock option award.

 

Total stock-based compensation expense included in the statements of operations for the three and nine months ended November 30, 2024 was $6,227 and $36,463, respectively, all of which was related to stock options. There was $0 stock-based compensation included in the statements of operations for the three and nine months ended November 30, 2023.

 

 

Option activity for the nine months ended November 30, 2024 and the year ended February 29, 2024 was as follows:

 

    Options    

Weighted

Average

Exercise

Price ($)

    

Weighted

Average

Remaining

Contractual

Life (Yrs.)

    

Aggregate

Intrinsic

Value ($)

  
                         
Options outstanding at February 28, 2023     -       -       -       -  
Options assumed pursuant to reverse acquisition     86,642       61.43       2.68       -  
Granted     -       -       -       -  
Exercised     -       -       -       -  
Forfeited or cancelled     (1,342 )     120.87       -       -  
Options outstanding at February 29, 2024     85,300       60.50       2.52       -  
Granted     -       -       -       -  
Exercised     -       -       -       -  
Forfeited or cancelled     (6,433 )     87.13       -       -  
Options outstanding November 30, 2024     78,867       58.18       1.78       -  
Options expected to vest in the future as of November 30, 2024     721       41.43       2.71       -  
Options exercisable at November 30, 2024     78,146       58.33       1.78       -  
Options vested, exercisable, and options expected to vest at November 30, 2024     78,867       58.18       1.78       -  

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the market price of our common stock. At November 30, 2024, no option had an exercise price below the $3.82 closing price of our common stock as reported on the Nasdaq Capital Market.

 

At November 30, 2024, there was $9,910 of unrecognized stock-based compensation expense related to unvested stock options with a weighted average remaining recognition period of 0.54 years.

 

Stock Appreciation Rights

 

The purposes of the 2020 Stock Appreciation Rights Plan (the “SAR 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 stockholders of the Company; and (iii) promote the success of the Company’s business. The SAR Plan provides for incentive awards only in the form of stock appreciation rights payable in cash (“SARs”) and no shares of common stock are reserved or will be issued pursuant to the SAR 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 (“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 of common stock on the date of grant of the SAR. The administrator of the SAR Plan will have the authority to, among other things, prescribe the terms and conditions of each SAR, including, without limitation, the exercise price and vesting provisions, and to specify the provisions of the SAR Agreement relating to such grant.

 

The Company did not grant any SAR’s during the nine months ended November 30, 2024 or November 30, 2023.

 

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

 

 

SARs activity for the nine months ended November 30, 2024 and the year ended February 29, 2024 was as follows:

 

    SARs    

Weighted

Average

Exercise

Price ($)

    

Weighted

Average

Remaining

Contractual Life (Yrs.)

    

Aggregate

Intrinsic

Value ($)

  
                         
SARs outstanding at February 28, 2023     -       -       -       -  
SARs assumed pursuant to reverse acquisition     40,390       44.77       2.99       -  
Exercised     -       -       -       -  
Forfeited or cancelled     -       -       -       -  
SARs outstanding at February 29, 2024     40,390       44.77       2.99       -  
Granted     -       -       -       -  
Exercised     -       -       -       -  
Forfeited or cancelled     (167 )     37.40       -       -  
SARs outstanding November 30, 2024     40,223       44.80       2.23       -  
SARs expected to vest in the future as of November 30, 2024     5,429       28.55       2.59       -  
SARs exercisable at November 30, 2024     34,794       47.33       2.18       -  
SARs vested, exercisable, and SARs expected to vest at November 30, 2024     40,223       44.80       2.23       -  

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the market price of our common stock. At November 30, 2024, no SAR had an exercise price below the $3.82 closing price of our common stock as reported on the Nasdaq Capital Market.

 

At November 30, 2024, there was $1,565 of unrecognized stock-based compensation expense related to unvested SARs with a weighted average remaining recognition period of 0.42 years.

 

Warrants

 

Warrant activity for the nine months ended November 30, 2024 and the year ended February 29, 2024 was as follows:

 

   Warrants  

Weighted

Average

Exercise

Price ($)

  

Weighted

Average

Remaining

Contractual

Life (Yrs.)

 
Warrants outstanding at February 28, 2023   -    -    - 
Warrants assumed pursuant to reverse acquisition   217,593    21,01    1.86 
Granted   268,572    3.02    2.17 
Exercised   -    -    - 
Forfeited or cancelled   -    -    - 
Warrants outstanding at February 29, 2024   486,165    9.94    1.96 
Granted   196,774    3.18    1.99 
Exercised   -    -    - 
Forfeited or cancelled   (3,202)   108.37    - 
Warrants outstanding at November 30, 2024   679,737    6.52    1.98