UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: May 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to _______

Commission File No. 001-38402

(Exact name of registrant as specified in its charter)

Nevada		26-3509845
(State or other jurisdiction of incorporation or formation)		(I.R.S. Employer Identification Number)

1560 Sawgrass Corporate Parkway, Suite 130, Sunrise, Florida		33323
(Address of principal executive offices)		(Zip Code)

(954) 888-9779

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.00001 Par Value Per Share		NXTP		The NASDAQ Stock Market LLC (Nasdaq Capital Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of July 14, 2022 the registrant had 117,913,353 shares of its common stock, par value $0.00001 per share, outstanding.

NEXTPLAY TECHNOLOGIES, INC.,

formerly MONAKER GROUP, INC.

FORM 10-Q

For the Quarter Ended May 31, 2022

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	ii

WHERE YOU CAN FIND OTHER INFORMATION	vi

PART I – FINANCIAL INFORMATION	1

Item 1. Financial Statements	1
Condensed Consolidated balance sheets (UNAUDITED)	1
Condensed Consolidated Statements of Operations, net and comprehensive loss (UNAUDITED)	2
Condensed Consolidated Statements of Stockholders’ Equity (UNAUDITED)	3
Condensed Consolidated Statements of Cash Flows (UNAUDITED)	4
Notes to the condensed Consolidated Financial Statements (Unaudited)	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3. Quantitative and Qualitative Disclosures About Market Risk	52
Item 4. Controls and Procedures.	52

PART II – OTHER INFORMATION	53

Item 1. Legal Proceedings	53
Item 1A. Risk Factors	53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3. Defaults Upon Senior Securities	54
Item 4. Mine Safety Disclosures	54
Item 5. Other Information	54
Item 6. Exhibits	55

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Report”), including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding future events and the future results of NextPlay Technologies, Inc., formerly Monaker Group, Inc. (the “Company”), that are based on current expectations, estimates, forecasts, and projections about the industries in which the Company operates and the beliefs and assumptions of the management of the Company. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. In particular, as discussed in greater detail below, our financial condition and results could be materially adversely affected by the continued impacts and disruptions caused by the novel coronavirus (“COVID-19”) global pandemic and governmental responses thereto. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements included in this Report. Factors that might cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Report, including under the section entitled “Risk Factors”, and in other reports the Company files with the Securities and Exchange Commission (“SEC”), including the Company’s Annual Report on Form 10-K for the year ended February 28, 2022, as filed with the SEC on June 21, 2022 (under the heading “Risk Factors” and in other parts of that report). The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason, except as otherwise required by law.

The following discussion is based upon our unaudited Condensed Consolidated Financial Statements included elsewhere in this Report, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, derivative liabilities and related disclosure of contingencies. Each of these decisions has some impact on the financial results for any given period. In making these decisions, we consider various factors including contractual obligations, customer satisfaction, competition, internal and external financial targets and expectations, and financial planning objectives. On an on-going basis, we evaluate our estimates, including those related to the fair value of investments, the carrying amounts of intangible assets, depreciation and amortization, deferred income taxes, purchase price allocation in connection with business combinations and allowance for credit losses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in other reports we file with the SEC, including in our most recent Annual Report on Form 10-K. All references to years relate to the Company’s fiscal year ended February 28 or 29 (during leap years) of the particular year.

Summary Risk Factors

We face risks and uncertainties related to our business, many of which are beyond our control. In particular, risks associated with our business include:

	●	We will need to raise additional funding to support our operations, which funding may not be available on favorable terms, if at all;

	●	We have a limited operating history in certain of the industries that we currently operate in and have incurred significant operating losses since inception. We may never become profitable or, if achieved, be able to sustain profitability;

	●	We have significant indebtedness, which could adversely affect our business and financial condition;

	●	We owe significant amounts to Streeterville Capital, LLC, which is secured by a security interest over substantially all of our assets, and we are subject to requirements, penalties and damages under our agreements with Streeterville;

	●	Our long-term success depends, in part, on our ability to continue to expand our operations outside of the United States and, as a result, our business is susceptible to risks associated with international operations;

	●	The sale of our travel and media businesses is contingent upon the satisfaction of a number of conditions, may not be completed on the currently contemplated timeline, or at all, and may not achieve the intended benefits;

	●	Currently pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements;

	●	The industries in which we participate are highly competitive;

	●	A failure to be current in our filings with the SEC could pose significant risks to our business, which could, individually or in the aggregate, materially and adversely affect our financial condition and results of operations.

	●	Our common stock may be delisted from the Nasdaq Capital Market if we cannot satisfy Nasdaq’s continued listing requirements;

	●	Some members of our senior management team have limited experience in the day-to-day operations of the industries in which our businesses operate;

	●	Our future success depends on the continuing efforts of our key employees and our ability to attract, hire, retain and motivate highly skilled employees in the future;

	●	We rely on relationships with developers to provide an extensive game portfolio and sufficient advertising spaces;

	●	We derive a significant portion of our revenues from advertisements, and if any events occur that negatively impact our relationships with advertisers, our advertising revenues and operating results and prospects could be harmed;

	●	Our products and internal systems rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems, or failures to address or mitigate technical limitations in such systems, could adversely affect our business;

	●	Our business partners may be unable to honor their obligations to us, or their actions may put us at risk;

	●	HotPlay’s go-to-market strategy and corresponding timeline are dependent on being able to successfully recruit substantial additional resources within Q2 of FY23. Failure to do this could result in the revenues generated from HotPlay being delayed beyond FY23;

iii

	●	Although Longroot is a licensed ICO Portal in Thailand, it has not yet closed any offerings, and there can be no assurances that it will;

	●	Longroot operations are subject to risks associated with digital asset exchanges being a new industry, regulatory changes and/or restrictions, potential illegal uses of digital assets, cyber security risks, and reliance on open source blockchain technologies;

	●	Our ability to generate revenue through the sale of digital assets is subject to risk associated with economic and market conditions, the acceptance and widespread use of digital assets, and investor confidence levels;

	●	The performance of the digital assets issued is dependent on the performance of the issuer and underlying asset, which is unpredictable and may result in reputation damage should they underperform;

	●	There are cyber security risks related to digital asset trading;

	●	We depend on third party cryptographic and algorithmic protocols governing the issuance of and transactions in digital assets;

	●	Our tokens might be used for illegal or improper purposes, which could expose us to additional liability and harm our business;

	●	Developing NextBank into a comprehensive FinTech solution provider involves a high level of complexity, may require substantial resources and costs, and is subject to obtaining regulatory approval;

	●	NextBank’s ability to originate loans is subject to risk associated with economic and market conditions;

	●	NextBank uses correspondent banks and is subject to risk associated with termination of such relationships, which may negatively impact its operations;

	●	Our success is subject to the development of new or upgraded products, services and features over time;

	●	We may be subject to liability for the activities of our property owners and managers, which could harm our reputation and increase our operating costs;

	●	Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, content, competition, and consumer protection. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business;

	●	Our business, products, and distribution are subject to increasing regulation in key territories. If we do not successfully respond to these regulations, our business could be negatively impacted;

	●	NextBank is subject to various regulatory capital requirements. Regulatory changes or actions may alter the requirements for capital;

	●	NextBank faces a risk of non-compliance and enforcement action related to the Bank Secrecy Act and other anti-money laundering, customer due diligence, and combating the financing of terrorism statutes and regulations;

	●	We are subject to anti-bribery, anti-corruption and similar laws, and non-compliance with such laws could subject us to criminal penalties or significant fines and harm our business and reputation;

	●	If we do not adequately protect our intellectual property, our ability to compete could be impaired;

	●	Certain of our products are subject to the threat of piracy and unauthorized copying, and inadequate intellectual property laws and other protections could prevent us from enforcing or defending our proprietary technologies;

	●	We may be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could require us to pay significant damages and limit our ability to operate;

	●	Our ability to acquire and maintain licenses to intellectual property may affect our revenue and profitability;

	●	We use open-source software in connection with certain of our games and services, which may pose particular risks to our proprietary software, products, and services, and which could have a negative impact on our business;

	●	The price of our common stock may fluctuate significantly, and investors could lose all or part of their investments;

	●	Stockholders may be diluted significantly as a result of the issuance of additional shares of our common stock or securities convertible into, or exercisable for, shares of our common stock;

	●	The ownership of our capital stock is highly concentrated, which may prevent other stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause our stock price to decline;

	●	If we fail to maintain effective internal controls, it could adversely affect our financial position and lower our stock price;

	●	If securities analysts and other industry experts do not publish research or publish negative research about our business, our stock price and trading volume could decline;

	●	Provisions in our amended and restated articles of incorporation limit the liability of our management to stockholders;

	●	Certain of our outstanding warrants include anti-dilutive rights;

	●	Sales of a substantial number of our securities in the public market could cause our stock price to fall; and

	●	We have not paid dividends on shares of our common stock in the past and do not plan to do so in the future.

WHERE YOU CAN FIND OTHER INFORMATION

We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, with the SEC. The SEC maintains a website (https://www.sec.gov) that contains reports, proxy and information statements and other information regarding us and other companies that file materials with the SEC electronically. Additional information about us is available on our website at www.nextplaytechnologies.com. We do not incorporate the information on or accessible through our websites into this filing, and you should not consider any information on, or that can be accessed through, our websites as part of this filing.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

NextPlay Technologies, Inc.

Condensed Consolidated Balance Sheets

	May 31, 2022			February 28, 2022
	(Unaudited)			(Audited)
Assets
Current assets
Cash and cash equivalents	$	2,406,475		$	4,282,110
Short term investments		305,271			304,509
Loans receivable, net		19,982,775			16,556,288
Loans receivable – related parties, net		705,000			725,000
Unbilled receivables		4,619			2,179
Other receivables		432,075			339,233
Other receivables, related parties		100,000			155,425
Prepaid expenses and other current assets		1,250,732			826,419
Advances for investments		1,977,213			3,227,117
Investments in unconsolidated affiliates: Short-term		4,188			8,722
Assets held for sale - current		28,514,136			7,332,994
Total current assets	$	55,682,484		$	33,759,996
Non-current assets
Investments in unconsolidated affiliates: Long-term		6,258			6,258
Convertible notes receivable, related party		4,594,214			4,594,214
Intangible assets, net		15,874,162			9,883,789
Goodwill		27,949,554			27,949,554
Computers, furniture and equipment, net		396,101			366,499
Operating lease right-of-use asset		1,554,144			1,894,654
Security deposits		428,943			177,972
Assets held for sale – non current		—			21,120,557
Total non-current asset	$	50,803,376		$	65,993,497
Total assets	$	106,485,860		$	99,753,493

Liabilities and stockholders’ equity
Current liabilities
Line of credit and notes payable, net	$	4,840,139		$	4,463,471
Accounts payable and accrued expenses		6,940,176			4,288,575
Accounts payable and accrued expenses – related parties		44,685			433,814
Other current liabilities		130,341			127,779
Current portion of operating lease liability		257,340			218,181
Other current liabilities - customer demand deposits payable		18,960,031			7,497,465
Notes payable - related party		733,396			765,040
Liabilities held for sale - current		9,975,136			9,708,053
Total current liabilities	$	41,881,244		$	27,502,378

Non-current liabilities
Note payable long term, related parties		—			966,314
Operating lease liability, net of current portion		1,452,347			1,543,627
Other long-term liability		8,114			6,087
Liabilities held for sale - non current		—			1,873,889
Total non-current liabilities	$	1,460,461		$	4,389,917
Total liabilities	$	43,341,705		$	31,892,295
Commitments and Contingencies

Stockholders’ equity
Series A Preferred stock, $0.01 par value; 3,000,000 authorized; 0 and 0 shares issued and outstanding at May 31, 2022 and February 28, 2022, respectively		—			—
Series B Preferred stock, $0.00001 par value; 10,000,000 authorized; 0 and 0 shares issued and outstanding at May 31, 2022 and February 28, 2022, respectively		—			—
Series C Preferred stock, $0.00001 par value; 3,828,500 authorized; 0 and 0 shares issued and outstanding at May 31, 2022 and February 28, 2022, respectively		—			—
Series D Preferred stock, $0.00001 par value; 6,100,000 authorized; 0 and 0 shares issued and outstanding at May 31, 2022 and February 28, 2022, respectively		—			—
Common stock, $0.00001 par value; 500,000,000 shares authorized; 111,736,081 and 108,360,020 shares outstanding at May 31, 2022 and February 28, 2022, respectively		1,118			1,084
Treasury stock		(771,453	)		(771,453	)
Additional paid-in-capital		104,414,539			104,393,361
Accumulated other comprehensive income		(746,819	)		(218,703	)
Accumulated deficit		(44,858,461	)		(39,173,079	)
Stockholders’ equity attributable to parent	$	58,038,924		$	64,231,210
Non-Controlling Interest in consolidated subsidiaries		1,605,586			3,629,988
Non-Controlling Interest in unconsolidated affiliates held for sale		3,499,645			—
Total stockholders’ equity		63,144,155			67,861,198
Total liabilities and stockholders’ equity	$	106,485,860		$	99,753,493

The accompanying notes are an integral part of these condensed consolidated financial statements.

NextPlay Technologies, Inc.

Condensed Consolidated Statements of Operations, Net and Comprehensive Loss

(Unaudited)

	For the three months ended
	May 31, 2022			May 31, 2021
	(Unaudited)			(Unaudited)
Revenue
Interest and financial services	$	466,551		$	—
Total revenue		466,551			—

Cost of Revenue
Interest and financial services		102,967			—
Total Cost of Revenue		102,967			—
Gross Profit		363,584			—
Operating Expenses
General and administrative		2,303,055			137,909
Salaries and benefits		1,429,444			178,126
Technology and development		279,606			55,794
Stock-based compensation		432,641			—
Selling and promotions expense		28,542			27,138
Depreciation and amortization		396,770			134,758
Total operating expenses		4,870,058			533,725
Operating Loss		(4,506,474	)		(533,725	)
Other Income/ (Expense)
Valuation loss, net		(4,534	)		—
Interest expense		(165,025	)		(40,958	)
Foreign exchange loss		—			(1,289	)
Other income		72,293			77
Total other income/(expense)		(97,266	)		(42,170	)
Net loss before tax from continuing operations	$	(4,603,740	)	$	(575,895	)
Estimated corporate taxes		—			—
Net Loss after tax from continuing operations:		(4,603,740	)		(575,895	)
Net Loss after tax from discontinued operations:		(808,246	)		—
Net Loss after tax from continuing operations:		(4,603,740	)		(575,895	)
Share of loss from non-controlling interest		144,890			178,768
Net loss from continuing operations attributable to parent	$	(4,458,850	)	$	(397,127	)
Net Loss after tax from discontinued operation:		(808,246	)		—
Share of profit from non-controlling interest		(418,286	)		—
Net loss from discontinued operation attributable to parent	$	(1,226,532	)	$	—
Net loss attributable to parent		(5,685,382	)		(397,127	)

Other Comprehensive (loss) income
Foreign currency translation loss from continuing operations		(201,534	)		(52,023	)
Foreign currency translation loss from discontinued operations		(746,581	)		—
Total other comprehensive (loss)		(948,115	)		(52,023	)
Comprehensive Loss		(6,360,101	)		(627,918	)

Currency translation allocated to:
Equity holders of the Company		(528,116	)		(25,491	)
Non-controlling interests of the subsidiaries		(419,999	)		(26,532	)
Total foreign currency translation		(948,115	)		(52,023	)

Total comprehensive loss attributable to:
Equity holders of the Company		(6,213,498	)		(422,618	)
Non-controlling interests of the subsidiaries		(146,603	)		(205,300	)
Total comprehensive loss		(6,360,101	)		(627,918	)

Weighted average number of common shares outstanding
Basic		109,508,246			62,400,000
Diluted		109,508,246			62,400,000

Basic net (loss) per share from continuing operations:	$	(0.04	)	$	(0.01	)
Basic net (loss) per share from discontinued operations:	$	(0.01	)	$	—
Total basic net (loss) per share	$	(0.05	)	$	(0.01	)

Diluted net (loss) per share from continuing operations:	$	(0.04	)	$	(0.01	)
Diluted net (loss) per share from discontinued operations:	$	(0.01	)	$	—
Total diluted net (loss) per share	$	(0.05	)	$	(0.01	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

NextPlay Technologies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended May 31, 2022 and May 31, 2021

(Unaudited)

	Common Stock Shares		Common Stock Amount		Treasury Stock			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive income			Total stockholders’ equity			Non-controlling interest			Stockholders’ equity
Balances, March 1, 2022		108,360,020	$	1,084		(771,453	)	$	104,393,361		$	(39,173,079	)	$	(218,703	)	$	64,231,210		$	3,629,988		$	67,861,198
Net loss for the period		—		—		—			—			(5,685,382	)		—			(5,685,382	)		273,396			(5,411,986	)
Shares issued for compensation		209,394		2		—			126,638			—			—			126,640			—			126,640
Shares issued for consulting services		250,000		3		—			305,998			—			—			306,001			—			306,001
Shares issued for assets acquisition		2,916,667		29		—			1,210,388			—			—			1,210,417			—			1,210,417
Increase in ownership of subsidiary - HotPlay		—		—		—			(1,621,846	)		—			—			(1,621,846	)		1,621,846			—
Foreign currency translation adjustment		—		—		—			—			—			(528,116	)		(528,116	)		(419,999	)		(948,115	)
Balances, May 31, 2022		111,736,081		1,118		(771,453	)		104,414,539			(44,858,461	)		(746,819	)		58,038,924			5,105,231			63,144,155

	Common Stock Shares		Common Stock Amount		Treasury Stock		Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive income			Total stockholders’ equity			Non-controlling interest			Stockholders’ equity
Balances, March 1, 2021		62,400,000		624		—		11,599,357		(1,200,309	)		10,221			10,409,893			(390,277	)		10,019,616
Net loss for the period		—		—		—		—		(397,127	)		—			(397,127	)		(178,768	)		(575,895	)
Foreign currency translation adjustment		—		—		—		—		—			(25,491	)		(25,491	)		(26,532	)		(52,023	)
Balances, May 31, 2021		62,400,000	$	624		—	$	11,599,357	$	(1,597,436	)	$	(15,270	)	$	9,987,275		$	(595,577	)	$	9,391,698

The accompanying notes are an integral part of these condensed consolidated financial statements.

NextPlay Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Three Months Ended
	May 31, 2022			May 31, 2021
Cash flows from operating activities:
Net loss from operations	$	(5,685,382	)	$	(397,127	)

Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		396,770			134,758
Valuation loss, net		4,534			—
Stock based compensation		432,641			—
Provision from employee benefits		2,301			—
Share of non-controlling interest		273,396			(

SEC Form 10-Q filed by NextPlay Technologies Inc.