UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 20172023
OR
☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from ______________to _______________.
Commission File Number 000-25097001-40447
ORBITAL TRACKING CORP.NEXTPLAT CORP
(Exact name of small business issuerregistrant as specified in its charter)
Nevada | 65-0783722 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
3250 Mary St., Suite 410, Coconut Grove, FL | 33133 | |
(Address of principal executive offices) | (Zip Code) |
18851 NE 29th Avenue, Suite 700(305)-560-5355
Aventura, FL 33180
Telephone: (305)-560-5355
(Address, including zip code, andRegistrant’s telephone number,
including area code
Securities registered pursuant to Section 12(b) of registrant’s principal executive offices)the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $0.0001 | NXPL | The Nasdaq Stock Market Inc. | ||
Warrants | NXPLW | The Nasdaq Stock Market Inc. |
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 for 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 [X]☒ No [ ]☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes [X]☒ No [ ]☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“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 inby Rule 12b-2 of the Exchange Act). Yes [ ]☐ No [X]☒
TheIndicate the number of shares outstanding of each of the Registrant’s Common Stock outstandingregistrant’s classes of common stock as of November 14, 2017 was 74,977,104.the latest practicable date.
Class | Outstanding at November 8, 2023 | |
Common Stock, $0.0001 par value | 18,724,596 |
FORM 10-Q
FORM 10-Q
i |
Item 1. Condensed Consolidated Financial Statements
The Company’s unaudited condensed consolidated financial statements of NextPlat Corp, (“NextPlat,” the “Company,” “we,” or “our”), for the three and nine months ended September 30, 20172023 and for comparable periods in the prior year are included below. The condensed consolidated financial statements should be read in conjunction with the notes to condensed consolidated financial statements that follow.
ORBITAL TRACKINGNEXTPLAT CORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
September 30, 2023 | December 31, 2022 | |||||||
(Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | 26,345,704 | $ | 18,891,232 | ||||
Accounts receivable, net | 7,802,121 | 383,786 | ||||||
Receivables - other, net | 2,945,327 | - | ||||||
Inventory, net | 4,986,734 | 1,286,612 | ||||||
Unbilled revenue | 168,678 | 141,702 | ||||||
VAT receivable | 369,422 | 432,769 | ||||||
Prepaid expenses | 865,766 | 45,679 | ||||||
Notes receivable | 251,485 | - | ||||||
Total Current Assets | 43,735,237 | 21,181,780 | ||||||
Property and equipment, net | 4,046,854 | 1,245,802 | ||||||
Goodwill | 3,144,000 | - | ||||||
Intangible assets, net | 14,116,748 | 50,001 | ||||||
Operating right of use assets, net | 1,035,269 | 854,862 | ||||||
Finance right-of-use assets, net | 28,807 | - | ||||||
Equity method investment | - | 5,260,525 | ||||||
Deposits | 39,137 | - | ||||||
Prepaid expenses, net of current portion | 49,135 | 49,078 | ||||||
Total Other Assets | 18,413,096 | 6,214,466 | ||||||
Total Assets | $ | 66,195,187 | $ | 28,642,048 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 13,680,665 | $ | 1,518,095 | ||||
Contract liabilities | 29,223 | 36,415 | ||||||
Notes payable | 385,303 | 60,490 | ||||||
Due to related party | 25,001 | 28,467 | ||||||
Operating lease liabilities | 366,494 | 208,660 | ||||||
Finance lease liabilities | 20,691 | - | ||||||
Income taxes payable | 178,310 | 94,244 | ||||||
Liabilities from discontinued operations | - | 112,397 | ||||||
Total Current Liabilities | 14,685,687 | 2,058,768 | ||||||
Long Term Liabilities: | ||||||||
Notes payable, net of current portion | 1,251,159 | 156,266 | ||||||
Operating lease liabilities, net of current portion | 712,521 | 649,895 | ||||||
Finance lease liabilities, net of current portion | 9,897 | - | ||||||
Total Liabilities | 16,659,264 | 2,864,929 | ||||||
Commitments and Contingencies | - | - | ||||||
Equity | ||||||||
Preferred stock ($0.0001 par value; 3,333,333 shares authorized) | - | - | ||||||
Common stock ($0.0001 par value; 50,000,000 shares authorized, 18,724,596 and 14,402,025 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively) | 1,872 | 1,440 | ||||||
Additional paid-in capital | 66,469,956 | 56,963,200 | ||||||
Accumulated deficit | (33,227,122 | ) | (31,146,804 | ) | ||||
Accumulated other comprehensive loss | (56,869 | ) | (40,717 | ) | ||||
Equity attributable to NextPlat Corp stockholders | 33,187,837 | 25,777,119 | ||||||
Equity attributable to noncontrolling interests | 16,348,086 | - | ||||||
Total Equity | 49,535,923 | 25,777,119 | ||||||
Total Liabilities and Equity | $ | 66,195,187 | $ | 28,642,048 | ||||
| September 30, 2017 | December 31, 2016 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 268,216 | $ | 114,733 | ||||
| Accounts receivable, net | 508,256 | 96,758 | ||||||
| Inventory | 397,988 | 335,267 | ||||||
| Unbilled revenue | 65,690 | 54,344 | ||||||
| Prepaid expenses | 151,102 | 171,164 | ||||||
| Other current assets | 59,668 | 29,841 | ||||||
| Total current assets | 1,450,920 | 802,107 | ||||||
| Property and equipment, net | 1,796,517 | 1,978,338 | ||||||
| Intangible assets, net | 231,250 | 250,000 | ||||||
| Total assets | $ | 3,478,687 | $ | 3,030,445 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 982,128 | $ | 536,906 | ||||
| Deferred revenue | 126,735 | 2,624 | ||||||
| Related party payable | 67,891 | 67,453 | ||||||
| Derivative liabilities – current portion | - | 1,237 | ||||||
| Liabilities from discontinued operations | 112,397 | 112,397 | ||||||
| Total current liabilities | 1,289,151 | 720,617 | ||||||
| Total Liabilities | - | 720,617 | ||||||
| Stockholders’ Equity: | ||||||||
| Preferred Stock, $0.0001 par value; 50,000,000 shares authorized | ||||||||
| Series A ($0.0001 par value; 20,000 shares authorized, and no shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | - | - | ||||||
| Series B ($0.0001 par value; 30,000 shares authorized, 6,666 and 6,666 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 1 | 1 | ||||||
| Series C ($0.0001 par value; 4,000,000 shares authorized, 3,540,365 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 354 | 354 | ||||||
| Series D ($0.0001 par value; 5,000,000 shares authorized, 3,008,984 and 3,428,984 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 301 | 343 | ||||||
| Series E ($0.0001 par value; 8,746,000 shares authorized, 7,002,877 and 7,929,651 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 700 | 793 | ||||||
| Series F ($0.0001 par value; 1,100,000 shares authorized, 1,099,998 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 110 | 110 | ||||||
| Series G ($0.0001 par value; 10,090,000 shares authorized, 10,083,351 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 1,008 | 1,008 | ||||||
| Series H ($0.0001 par value; 200,000 shares authorized, 87,500 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 9 | 9 | ||||||
| Series I ($0.0001 par value; 114,944 shares authorized, 92,944 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 9 | 9 | ||||||
| Series J ($0.0001 par value; 125,000 shares authorized, 54,669 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 5 | |||||||
| Series K ($0.0001 par value; 1,250,000 shares authorized, 1,166,652 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively) | 117 | |||||||
| Common Shares, $0.0001 par value; 750,000,000 shares authorized, 74,977,104 and 57,309,364 outstanding as of September 30, 2017 and December 31, 2016, respectively | 7,498 | 5,731 | ||||||
| Additional paid-in capital | 10,390,184 | 6,935,817 | ||||||
| Accumulated (deficit) | (8,210,745 | ) | (4,601,406 | ) | ||||
| Accumulated other comprehensive loss | (15 | ) | (32,941 | ) | ||||
| Total stockholder equity | 2,189,536 | 2,309,828 | ||||||
| Total liabilities and stockholders’ equity | $ | 3,478,687 | $ | 3,030,445 | ||||
See accompanying notes to condensed consolidated financial statements.
NEXTPLAT CORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||
September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Sales of products, net | $ | 12,788,758 | $ | 2,630,826 | $ | 18,622,274 | $ | 9,080,083 | ||||||||
Revenues from services | 2,501,413 | - | 2,501,413 | - | ||||||||||||
Revenue, net | 15,290,171 | 2,630,826 | 21,123,687 | 9,080,083 | ||||||||||||
Cost of products | 10,633,953 | 1,952,072 | 15,002,783 | 7,032,847 | ||||||||||||
Cost of services | 71,536 | - | 71,536 | - | ||||||||||||
Cost of revenue | 10,705,489 | 1,952,072 | 15,074,319 | 7,032,847 | ||||||||||||
Gross profit | 4,584,682 | 678,754 | 6,049,368 | 2,047,236 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 4,187,429 | 1,699,711 | 7,495,601 | 3,434,916 | ||||||||||||
Salaries, wages and payroll taxes | 2,483,432 | 651,219 | 4,039,307 | 1,957,592 | ||||||||||||
Professional fees | 520,726 | 356,306 | 1,385,474 | 839,509 | ||||||||||||
Depreciation and amortization | 871,066 | 136,457 | 1,200,825 | 348,022 | ||||||||||||
Total operating expenses | 8,062,653 | 2,843,693 | 14,121,207 | 6,580,039 | ||||||||||||
Loss before other (income) expense | (3,477,971 | ) | (2,164,939 | ) | (8,071,839 | ) | (4,532,803 | ) | ||||||||
Other (income) expense: | ||||||||||||||||
Interest expense | 45,949 | 8,725 | 55,657 | 15,649 | ||||||||||||
Interest earned | (209,798 | ) | (3,849 | ) | (392,545 | ) | (13,421 | ) | ||||||||
Other income | - | - | (315,845 | ) | - | |||||||||||
Foreign currency exchange rate variance | 164,504 | 89,025 | 95,831 | 229,753 | ||||||||||||
Total other (income) expense | 655 | 93,901 | (556,902 | ) | 231,981 | |||||||||||
Loss before income taxes and equity in net loss of affiliate | (3,478,626 | ) | (2,258,840 | ) | (7,514,937 | ) | (4,764,784 | ) | ||||||||
Income taxes | (23,011 | ) | - | (75,034 | ) | - | ||||||||||
Loss before equity in net loss of affiliate | (3,501,637 | ) | (2,258,840 | ) | (7,589,971 | ) | (4,764,784 | ) | ||||||||
Gain on remeasurement of fair value of equity interest in affiliate prior to acquisition | 6,138,051 | - | 6,138,051 | - | ||||||||||||
Equity in net loss of affiliate | - | (3,454,436 | ) | (1,439,637 | ) | (3,454,436 | ) | |||||||||
Net income (loss) | 2,636,414 | (5,713,276 | ) | (2,891,557 | ) | (8,219,220 | ) | |||||||||
Net loss attributable to noncontrolling interest | 811,239 | - | 811,239 | - | ||||||||||||
Net income (loss) attributable to NextPlat Corp | $ | 3,447,653 | $ | (5,713,276 | ) | $ | (2,080,318 | ) | $ | (8,219,220 | ) | |||||
Comprehensive income (loss): | ||||||||||||||||
Net income (loss) | $ | 2,636,414 | $ | (5,713,276 | ) | $ | (2,891,557 | ) | $ | (8,219,220 | ) | |||||
Foreign currency gain (loss) | 18,801 | (67,635 | ) | (16,152 | ) | (87,753 | ) | |||||||||
Comprehensive income (loss) | $ | 2,655,215 | $ | (5,780,911 | ) | $ | (2,907,709 | ) | $ | (8,306,973 | ) | |||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 3,447,653 | $ | (5,713,276 | ) | $ | (2,080,318 | ) | $ | (8,219,220 | ) | |||||
Weighted number of common shares outstanding – basic | 18,702,857 | 9,469,509 | 17,079,077 | 9,310,936 | ||||||||||||
Weighted number of common shares outstanding – diluted | 20,295,549 | 9,469,509 | 17,079,077 | 9,310,936 | ||||||||||||
Basic earnings (loss) per share | $ | 0.18 | $ | (0.60 | ) | $ | (0.12 | ) | $ | (0.88 | ) | |||||
Diluted earnings (loss) per share | $ | 0.17 | $ | (0.60 | ) | $ | (0.12 | ) | $ | (0.88 | ) | |||||
See the accompanying notes to the unaudited condensed consolidated financial statements.
ORBITAL TRACKINGNEXTPLAT CORP AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF OPERATIONSCHANGES IN EQUITY
(Unaudited)
For the Three and Nine Months Ended September 30, 2023
Common Stock | Additional | |||||||||||||||||||||||||||
$0.0001 Par Value | Paid in | Accumulated | Comprehensive | Stockholders’ | Noncontrolling | |||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income (Loss) | Equity NextPlat Corp | Interests | ||||||||||||||||||||||
Balance, December 31, 2022 | 14,402,025 | $ | 1,440 | $ | 56,963,200 | $ | (31,146,804 | ) | $ | (40,717 | ) | $ | 25,777,119 | $ | - | |||||||||||||
Issuance of common stock related to restricted stock award | 39,000 | 4 | 60,536 | - | - | 60,540 | - | |||||||||||||||||||||
Comprehensive loss | - | - | - | - | (22,985 | ) | (22,985 | ) | - | |||||||||||||||||||
Net Loss | - | - | - | (1,187,230 | ) | - | (1,187,230 | ) | - | |||||||||||||||||||
Balance, March 31, 2023 | 14,441,025 | $ | 1,444 | $ | 57,023,736 | $ | (32,334,034 | ) | $ | (63,702 | ) | $ | 24,627,444 | $ | - | |||||||||||||
Issuance of common stock related to April offering | 3,428,571 | 343 | 5,999,657 | - | - | 6,000,000 | - | |||||||||||||||||||||
Issuance of common stock related to exercise of warrants | 105,000 | 10 | 183,740 | - | - | 183,750 | - | |||||||||||||||||||||
Issuance of common stock related to restricted stock award | 725,000 | 73 | 1,183,061 | - | - | 1,183,134 | - | |||||||||||||||||||||
Stock-based compensation in connection with options granted | - | - | 780,867 | - | - | 780,867 | - | |||||||||||||||||||||
Comprehensive loss | - | - | - | - | (11,968 | ) | (11,968 | ) | - | |||||||||||||||||||
Net loss | - | - | - | (4,340,741 | ) | - | (4,340,741 | ) | - | |||||||||||||||||||
Balance, June 30, 2023 | 18,699,596 | $ | 1,870 | $ | 65,171,061 | $ | (36,674,775 | ) | $ | (75,670 | ) | $ | 28,422,486 | $ | - | |||||||||||||
Acquisition of subsidiary and noncontrolling interests | - | - | (34,737 | ) | - | - | (34,737 | ) | 15,957,487 | |||||||||||||||||||
Issuance of common stock related to restricted stock award | 25,000 | 2 | 836,716 | - | - | 836,718 | 150,003 | |||||||||||||||||||||
Stock-based compensation in connection with options granted | - | - | 496,916 | - | - | 496,916 | 1,051,835 | |||||||||||||||||||||
Comprehensive income | - | - | - | - | 18,801 | 18,801 | - | |||||||||||||||||||||
Net income (loss) | - | - | - | 3,447,653 | - | 3,447,653 | (811,239 | ) | ||||||||||||||||||||
Balance, September 30, 2023 | 18,724,596 | $ | 1,872 | $ | 66,469,956 | $ | (33,227,122 | ) | $ | (56,869 | ) | $ | 33,187,837 | $ | 16,348,086 | |||||||||||||
For the Three and Nine Months Ended September 30, 2022
Common Stock | Additional | |||||||||||||||||||||||
$0.0001 Par Value | Paid in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income (Loss) | Equity NextPlat Corp | |||||||||||||||||||
Balance, December 31, 2021 | 7,053,146 | $ | 705 | $ | 39,513,093 | $ | (21,986,215 | ) | $ | 3,236 | $ | 17,530,819 | ||||||||||||
Issuance of common stock related to offering | 2,229,950 | 223 | 7,004,815 | - | - | 7,005,038 | ||||||||||||||||||
Issuance of common stock related to restricted stock award | 10,000 | 1 | 34,799 | - | - | 34,800 | ||||||||||||||||||
Comprehensive loss | - | - | - | - | (15,330 | ) | (15,330 | ) | ||||||||||||||||
Net loss | - | - | - | (850,083 | ) | - | (850,083 | ) | ||||||||||||||||
Balance, March 31, 2022 | 9,293,096 | $ | 929 | $ | 46,552,707 | $ | (22,836,298 | ) | $ | (12,094 | ) | $ | 23,705,244 | |||||||||||
Stock based compensation in relation to restricted stock award | - | - | 654,246 | - | - | 654,246 | ||||||||||||||||||
Comprehensive loss | - | - | - | - | (4,788 | ) | (4,788 | ) | ||||||||||||||||
Net loss | - | - | - | (1,655,861 | ) | - | (1,655,861 | ) | ||||||||||||||||
Balance, June 30, 2022 | 9,293,096 | $ | 929 | $ | 47,206,953 | $ | (24,492,159 | ) | $ | (16,882 | ) | $ | 22,698,841 | |||||||||||
Stock based compensation in relation to restricted stock award | 356,000 | 36 | 654,484 | - | - | 654,520 | ||||||||||||||||||
Stock based compensation in relation to options granted | - | - | 620,199 | - | - | 620,199 | ||||||||||||||||||
Comprehensive loss | - | - | - | - | (67,635 | ) | (67,635 | ) | ||||||||||||||||
Net loss | - | - | - | (5,713,276 | ) | - | (5,713,276 | ) | ||||||||||||||||
Balance, September 30, 2022 | 9,649,096 | $ | 965 | $ | 48,481,636 | $ | (30,205,435 | ) | $ | (84,517 | ) | $ | 18,192,649 | |||||||||||
See accompanying notes to condensed consolidated financial statements.
NEXTPLAT CORP AND COMPREHENSIVE LOSSSUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED
(Unaudited)
| Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | Nine months Ended September 30, 2017 | Nine months Ended September 30, 2016 | |||||||||||||
| Net sales | $ | 1,588,466 | $ | 1,299,373 | $ | 4,547,491 | $ | 3,783,230 | ||||||||
| Cost of sales | 1,240,654 | 1,035,278 | 3,589,537 | 2,935,631 | ||||||||||||
| Gross profit | 347,812 | 264,095 | 957,954 | 847,599 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and general administrative | 158,312 | 150,024 | 456,935 | 456,881 | ||||||||||||
| Salaries, wages and payroll taxes | 178,762 | 158,720 | 513,349 | 503,556 | ||||||||||||
| Stock based compensation | - | - | 600,000 | - | ||||||||||||
| Professional fees | 163,754 | 192,834 | 432,320 | 881,318 | ||||||||||||
| Depreciation and amortization | 74,143 | 70,219 | 224,319 | 216,375 | ||||||||||||
| Total operating expenses | 574,971 | 571,797 | 2,226,923 | 2,058,130 | ||||||||||||
| (Loss) before other expenses and income taxes | (227,159 | ) | (307,702 | ) | (1,268,969 | ) | (1,210,531 | ) | ||||||||
| Other (income) expense | ||||||||||||||||
| Change in fair value of derivative instruments, net | - | (944 | ) | (1,237 | ) | (425,790 | ) | |||||||||
| Interest expense | 10 | 441 | 446 | 603,427 | ||||||||||||
| Other expense – Subscription Holders Preferred | - | - | 2,308,981 | |||||||||||||
| Foreign currency exchange rate variance | 38,530 | 31,473 | 32,180 | 64,295 | ||||||||||||
| Total other expense | 38,540 | 30,970 | 2,340,370 | 241,932 | ||||||||||||
| Net loss | $ | (265,699 | ) | $ | (338,672 | ) | $ | (3,609,339 | ) | $ | (1,452,463 | ) | ||||
| Comprehensive Loss: | ||||||||||||||||
| Net loss | (265,699 | ) | (338,672 | ) | (3,609,339 | ) | (1,452,463 | ) | ||||||||
| Foreign currency translation adjustments | 18,485 | 19,888 | 32,926 | 17,513 | ||||||||||||
| Comprehensive loss | (247,214 | ) | (318,874 | ) | (3,576,413 | ) | (1,434,950 | ) | ||||||||
| NET INCOME LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | ||||||||||||||||
| Weighted number of common shares outstanding - basic | 72,669,412 | 39,545,787 | 44,087,590 | 29,272,457 | ||||||||||||
| Weighted number of common shares outstanding - diluted | 72,669,412 | 39,545,787 | 44,087,590 | 29,272,457 | ||||||||||||
| Basic net (loss) per share | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.08 | ) | $ | (0.05 | ) | ||||
| Diluted net (loss) per share | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.08 | ) | $ | (0.05 | ) | ||||
September 30, 2023 | September 30, 2022 | |||||||
(Unaudited) | (Unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (2,891,557 | ) | $ | (8,219,220 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation expense | 539,235 | 329,272 | ||||||
Change in provision for doubtful accounts | 12,000 | |||||||
Amortization of intangible assets | 653,254 | 18,750 | ||||||
Amortization of right-of-use assets - operating leases | 187,863 | 58,284 | ||||||
Amortization of right-of-use assets - finance leases | 8,336 | - | ||||||
Gain on remeasurement of fair value of equity interest in affiliate prior to acquisition | (6,138,051 | ) | - | |||||
Equity in net loss of affiliate | 1,439,637 | 3,454,436 | ||||||
Stock-based compensation | 4,560,013 | 1,343,566 | ||||||
Fair value of option granted | - | 620,199 | ||||||
Change in operating assets and liabilities: | - | - | ||||||
Accounts receivable | (3,897,500 | ) | (339,258 | ) | ||||
Inventory | (2,069,241 | ) | (118,594 | ) | ||||
Unbilled revenue | (26,976 | ) | (19,937 | ) | ||||
Prepaid expense | (342,831 | ) | 37,170 | |||||
Notes receivable | (251,485 | ) | - | |||||
Other assets | - | 48,539 | ||||||
VAT receivable | 63,347 | 136,299 | ||||||
Accounts payable and accrued expenses | 4,120,297 | 23,700 | ||||||
Operating lease liabilities | (179,122 | ) | (61,213 | ) | ||||
Income taxes payable | 84,066 | (41,313 | ) | |||||
Contract liabilities | (7,192 | ) | (1,756 | ) | ||||
Liabilities from discontinued operations | (112,397 | ) | - | |||||
Net cash used in operating activities | (4,248,304 | ) | (2,731,076 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (457,914 | ) | (471,118 | ) | ||||
Cash acquired in acquisition of subsidiary | 7,352,183 | - | ||||||
Capital contributions to equity method investee | (1,506,000 | ) | (7,000,000 | ) | ||||
Net cash provided by (used in) investing activities | 5,388,269 | (7,471,118 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Repayments of note payable, related party, net | (3,467 | ) | (19,616 | ) | ||||
Issuance of common stock for PIPE transaction | 6,000,000 | 5,605,038 | ||||||
Proceeds from exercise of warrants | 689,750 | - | ||||||
Payments on finance lease liabilities | (7,962 | ) | - | |||||
Repayments of notes payable | (347,830 | ) | (51,104 | ) | ||||
Net cash provided by financing activities | 6,330,491 | 5,534,318 | ||||||
Effect of exchange rate on cash | (15,984 | ) | (130,494 | ) | ||||
Net increase (decrease) in cash | 7,454,472 | (4,798,370 | ) | |||||
Cash beginning of period | 18,891,232 | 17,267,978 | ||||||
Cash end of period | $ | 26,345,704 | $ | 12,469,608 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Cash paid during the period for | ||||||||
Interest | $ | 353,566 | $ | 10,137 | ||||
Income tax | $ | - | $ | 38,555 | ||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||
Recognition of operating lease liability | $ | - | $ | 904,744 | ||||
See the accompanying notes to the unaudited condensed consolidated financial statements.
Unless the context requires otherwise, references to the “Company”, “we”, “us”, “our”, “our Company”, or “our business” refer to Nextplat Corp and its subsidiaries.
ORBITAL TRACKING CORP AND SUBSIDIARIES
Note 1. Organization and Nature of Operations.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
(Unaudited) The term “Company” refers to NextPlat Corp and its wholly, majority owned and controlled subsidiaries, except where the context requires otherwise or where otherwise indicated.
| September 30, 2017 | September 30, 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (3,609,339 | ) | $ | (1,452,463 | ) | ||
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||||||||
| Change in fair value of derivative liabilities | (1,237 | ) | (425,790 | ) | ||||
| Depreciation expense | 205,569 | 197,625 | ||||||
| Amortization of intangible asset | 18,750 | 18,750 | ||||||
| Preferred stock-based price protection expense | 2,308,981 | - | ||||||
| Amortization of notes payable discount | - | 602,515 | ||||||
| Stock based compensation | 600,000 | - | ||||||
| Amortization of prepaid expense in connection with the issuance of common stock issued for prepaid services | 121,096 | 164,608 | ||||||
| Imputed interest | 446 | 912 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | (411,498 | ) | (28,139 | ) | ||||
| Inventory | (62,721 | ) | (99,202 | ) | ||||
| Unbilled revenue | (11,346 | ) | 17,415 | |||||
| Prepaid expense | (101,034 | ) | 115,359 | |||||
| Other current assets | (29,827 | ) | (1,909 | ) | ||||
| Accounts payable and accrued liabilities | 491,916 | 131,321 | ||||||
| Deferred revenue | 124,111 | (13,937 | ) | |||||
| Net (used in) operating activities | (356,133 | ) | (772,935 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (20,676 | ) | (34,967 | ) | ||||
| Net (cash used) in investing activities | (20,676 | ) | (34,967 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payments of convertible notes payable | (100,834 | ) | ||||||
| Proceeds from sale of preferred stock | 500,000 | - | ||||||
| Proceeds (repayments) of note payable, related party, net | 438 | 57,807 | ||||||
| Net cash provided by (used in) financing activities | 500,438 | (43,027 | ) | |||||
| Effect of exchange rate on cash | 29,854 | 5,849 | ||||||
| Net increase (decrease) in cash | 153,482 | (845,081 | ) | |||||
| Cash beginning of period | 114,733 | 963,329 | ||||||
| Cash end of period | $ | 268,216 | $ | 118,248 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
| Cash paid during the period for | ||||||||
| Interest | $ | - | $ | - | ||||
| Income tax | $ | - | $ | 3,898 | ||||
| NON CASH FINANCE AND INVESTING ACTIVITY | ||||||||
| Common stock issued for prepaid services | $ | - | $ | 100,000 | ||||
| Preferred stock issued for accounts payable | $ | 46,694 | $ | 22,500 | ||||
| Preferred stock issued for conversion of debt | $ | - | $ | 650,670 | ||||
NextPlat Corp:
SeeNextPlat Corp, a Nevada corporation (the “Company”, “NextPlat”, “we”), formerly Orbsat Corp was incorporated in 1997. The Company operates two main e-commerce websites as well as 25third-party e-commerce storefronts on platforms such as Alibaba, Amazon and Walmart. These e-commerce venues form an effective global network serving thousands of consumers, enterprises, and governments. NextPlat has announced its intention to broaden its e-commerce platform and is implementing a comprehensive system upgrade to support this initiative. The Company has also begun the accompanying notes todesign and development of a next generation platform for digital assets built for Web3 (an internet service built using decentralized blockchains). This new platform (“NextPlat Digital”) is currently in the unaudited condensed consolidated financial statements.design and development phase and will enable the use of a range of digital assets, such as non-fungible tokens (“NFTs”), in e-commerce and in community-building activities. In addition, we provide a comprehensive array of Satellite Industry communication services and related equipment sales.
Our wholly-owned subsidiary, Global Telesat Communications Limited (“GTC”), was formed under the laws of England and Wales in 2008. On February 19, 2015, we entered into a share exchange agreement with GTC and all of the holders of the outstanding equity of GTC pursuant to which we acquired all of the outstanding equity in GTC.
Our wholly-owned subsidiary, Orbital Satcom Corp. (“Orbital Satcom”), a Nevada corporation, was formed on November 14, 2014.
On June 22, 2022, NextPlat B.V. (“NXPLBV”) was formed in Amsterdam, Netherlands, as a wholly owned subsidiary of NextPlat Corp. Presently, NXPLBV does not have any active operations
Progressive Care Inc.:
Progressive Care Inc. (“Progressive Care”) was incorporated under the laws of the state of Delaware on October 31, 2006.
Progressive, through its wholly-owned subsidiaries, Pharmco, LLC (“Pharmco 901”), Touchpoint RX, LLC doing business as Pharmco Rx 1002, LLC (“Pharmco 1002”), Family Physicians RX, Inc. doing business as PharmcoRx 1103 and PharmcoRx 1204 (“FPRX” or “Pharmco 1103” and “Pharmco 1204”) (pharmacy subsidiaries collectively referred to as “Pharmco”), and ClearMetrX Inc. (“ClearMetrX”) is a personalized healthcare services and technology company that provides prescription pharmaceuticals and risk and data management services to healthcare organizations and providers.
Pharmco 901 was formed on November 29, 2005 as a Florida Limited Liability Company and is a 100% owned subsidiary of Progressive Care. Pharmco 901 was acquired by Progressive on October 21, 2010. Progressive currently delivers prescriptions to Florida’s diverse population and ships medications to patients in states where they hold non-resident pharmacy licenses as well. Progressive currently holds Florida Community Pharmacy Permits at all Florida pharmacy locations and the Pharmco 901 location is licensed as a non-resident pharmacy in the following states: Arizona, Colorado, Connecticut, Georgia, Illinois, Minnesota, Nevada, New Jersey, New York, Pennsylvania, Texas, and Utah. Progressive is able to dispense to patients in the state of Massachusetts without a non-resident pharmacy license because Massachusetts does not require such a license for these activities.
Pharmco 1103 is a pharmacy with locations in North Miami Beach and Orlando, Florida that provides Pharmco’s pharmacy services to Miami-Dade County, Broward County, the Orlando/Tampa corridor, and the Treasure Coast of Florida. Progressive acquired all the ownership interests in Pharmco 1103 in a purchase agreement entered into on June 1, – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2019.
Pharmco 1002 is a pharmacy located in Palm Springs, Florida that provides Pharmco’s pharmacy services to Palm Beach, St. Lucie and Martin Counties, Florida. Progressive acquired all the ownership interests in Pharmco 1002 in a purchase agreement entered into on July 1, 2018.
ClearMetrX was formed on June 10, 2020 and provides third-party administration (“TPA”) services to 340B covered entities. ClearMetrX also provides data analytics and reporting services to support and improve care management for health care organizations.
RXMD Therapeutics was formed on October 1, 2019. RXMD Therapeutics has had no operating activity to date.
Note 2. Basis of Presentation and Principles of Consolidation
The accompanying unaudited interim condensed consolidated financial statementsCondensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), consistent in all material respects with those applied in the 2022 Form 10-K, for interim financial statements and do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The consolidated financial statements as of December 31, 2016 have been audited by an independent registered public accounting firm. The accounting policies and procedures employed in the preparation of these condensed consolidated financial statements have been derived from the audited financial statements of the Company for the year ended December 31, 2016, which are contained in Form 10-K as filed with the Securities and Exchange Commission on April 7, 2017. The consolidated balance sheet as of December 31, 2016 was derived from those financial statements.
Basis of Presentation and Principles of Consolidation
The condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and the rules and regulations of the U.S Securities and Exchange Commission for Interim Financial Information. The condensed(“SEC”). Accordingly, they do not include all information and footnotes normally included in annual consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the 2022 Form 10-K. In the opinion of management, the Condensed Consolidated Financial Statements contain all adjustments (consisting principally of normal recurring accruals) necessary for a fair presentation of the condensed consolidated balance sheets, statements of comprehensive loss, statements of stockholders’ equity and statements of cash flows for such interim periods presented. Additionally, operating results for interim periods are not necessarily indicative of the results that can be expected for a full year.
Business acquisition of Progressive Care, Inc.
On July 1, 2023, the Company, Charles M. Fernandez, Executive Chairman and Chief Executive Officer of the Company, and Rodney Barreto, Director of the Company, exercised common stock purchase warrants and were issued common stock shares by Progressive Care. After the exercise of the common stock purchase warrants, the Company and Messrs. Fernandez and Barreto collectively owned 53% of Progressive Care’s voting common stock. At the time of exercise, all of the above common stock purchase warrants were in-the-money. Also on July 1, 2023, the Company and Messrs. Fernandez and Barreto entered into a voting agreement whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs. Fernandez and Barreto agreed to vote all of the common stock shares (including any new shares acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Common Stock) that they own, directly or indirectly, in the same manner that NextPlat votes its common stock and equivalents. The voting agreement is irrevocable and perpetual in term.
The exercise of the stock options, along with the entry into the voting agreement, resulted in a change in control of Progressive Care under the voting interest model in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805,Business Combination, and was accounted for as a business acquisition. Therefore, Progressive Care became a consolidated subsidiary of the Company on July 1, 2023. The Company previously accounted for its equity interest in Progressive Care as an equity method investment.
The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompanyIntercompany transactions and balances have been eliminated. All adjustments (consisting of normal recurring items) necessaryeliminated in consolidation. Certain 2022 financial information has been reclassified to present fairlyconform to the 2023 presentation. Such reclassifications do not impact the Company’s previously reported financial position as of September 30, 2017, and the results of operations and cash flows for the nine and three months ended September 30, 2017 have been included. The results of operations for the nine and three months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year.or net income (loss).
Description of Business
Orbital Tracking Corp. (the “Company”) was formerly Great West Resources, Inc., a Nevada corporation. The Company, through its wholly owned subsidiaries, Global Telesat Communications Limited (“GTCL”) and Orbital Satcom Corp. (“Orbital Satcom”) is a provider of satellite based hardware, airtime and related services both in the United States and internationally. The Company’s principal focus is on growing the Company’s existing satellite based hardware, airtime and related services business line and developing the Company’s own tracking devices for use by retail customers worldwide.
Use of Estimates
In preparing the consolidated financial statements,Condensed Consolidated Financial Statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition, and revenues and expenses for the years then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, the assumptions used to calculate stock-based compensation, derivative liabilities, preferred deemed dividend andfair value of net assets acquired in the business combination with Progressive Care Inc. common stock and options issued for services.services, net realizable value of accounts receivables the useful lives of property and equipment and intangible assets, the estimate of the fair value of the lease liability and related right of use assets, and the estimates of the valuation allowance on deferred tax assets and corporate income taxes.
Cash and Cash EquivalentsNote 3. Summary of Significant Accounting Policies
The significant accounting policies of the Company considers all highly liquid investments withwere described in Note 1 to the Audited Consolidated Financial Statements included in the Company’s Form 10-K for the fiscal year ended December 31, 2022. Progressive Care became a maturityconsolidated subsidiary of the Company on July 1, 2023 and as a result the Company has incorporated certain significant accounting policies of Progressive Care for the three months or less when acquired to be cash equivalents. ended September 30, 2023.
Cash
The Company places its cash with a high credit quality financial institution.institutions. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits.
Accounts receivable and allowance for doubtful accounts
The Company has a policy of reserving for questionable accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the bad debt expense after all means of collection have been exhausted and the potential for recovery is considered remote. As of September 30, 2017, and December 31, 2016, there is an allowance for doubtful accounts of $427 and $6,720.
Inventories
Inventories are valued at the lower of cost or market, using the first-in first-out cost method. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete orAll cash amounts in excess of $250,000, approximately $2.1 million, are unsecured. In April 2023, the Company’s forecasted usageCompany entered into a deposit placement agreement for Insured Cash Sweep Service (“ICS”). This service is a secure, and convenient way to their estimated net realizable value.access FDIC protection on large deposits, earn a return, and enjoy flexibility. The Company estimatesbelieves that the net realizable valueICS agreement will mitigate its credit risk as it relates to uninsured FDIC amounts in excess of such inventories based on analysis and assumptions including, but not limited to, historical usage, expected future demand and market requirements. A change to the carrying value of inventories is recorded to cost of goods sold.
$250,000.
Foreign Currency Translation
The Company’s reporting currency is USU.S. Dollars. The accounts of one of the Company’s subsidiaries, GTCL,GTC, is maintained using the appropriate local currency, (GreatGreat British Pound)Pound, as the functional currency. All assets and liabilities are translated into U.S. Dollars at balance sheet date, shareholders’ equity is translated at historical rates and revenue and expense accounts are translated at the average exchange rate for the year or the reporting period. The translation adjustments are deferredreported as a separate component of stockholders’ equity, captioned as accumulated other comprehensive (loss) gain. Transaction gains and losses arising from exchange rate fluctuationfluctuations on transactions denominated in a currency other than the functional currency isare included in the condensed consolidated statements of operations.comprehensive loss.
The relevant translation rates are as follows: for the three and nine months ended September 30, 20172023, closing rate at 1.3399$1.22 US$: GBP, quarterly average rate at 1.30842$1.26 US$: GBP, and 1.27500 US$: GBP. Forfor the three and nine months ended September 30, 20162022, closing rate at 1.29820$1.12 US$: GBP, quarterly average rate at 1.31320$1.18 US$: GBP, and 1.39353 US$: GBP and for the year ended 2016December 31, 2022 closing rate at 1.23451.21 US$: GBP, yearly average rate at 1.355851.24 US$: GBP.
Global Telesat Communications LTD, (GTCL)
Unearned Revenue
Contract liabilities are shown separately in the condensed consolidated balance sheets as current liabilities. At September 30, 2023 and December 31, 2022, we had contract liabilities of approximately $29,000 and $36,000, respectively.
Accounts Receivable and Allowance for Doubtful Accounts
Progressive Care trade accounts receivable are stated at the invoiced amount. Trade accounts receivable primarily include amounts from third-party pharmacy benefit managers (“PBMs”) and insurance providers and are based on contracted prices. Trade accounts receivable are unsecured and require no collateral. Progressive Care records an allowance for doubtful accounts for estimated differences between the expected and actual payment of accounts receivable. These reductions were made based upon reasonable and reliable estimates that were determined by reference to historical experience, contractual terms, and current conditions. Each quarter, the Progressive Care reevaluates its estimates to assess the adequacy of its allowance and adjusts the amounts as necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
Goodwill
Goodwill represents 67.4%the excess of total company salesthe purchase price of over the value assigned to net tangible and identifiable intangible assets. Progressive Care is considered to be the reporting unit for goodwill. Acquired intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite. For intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded values. Valuation techniques consistent with the market approach, income approach, and/or cost approach are used to measure fair value. Goodwill and other indefinite-lived intangible assets are assessed annually for impairment in the fourth fiscal quarter and in interim periods if events or changes in circumstances indicate that the assets may be impaired.
Direct and Indirect Remuneration ("DIR") Fees
Progressive Care reports DIR fees as a reduction of revenue on the accompanying Consolidated Statements of Operations. DIR fees are fees charged by PBMs to pharmacies for network participation as well as periodic reimbursement reconciliations. For some pharmacy benefit managers ("PBMs"), DIR fees are charged at the time of the settlement of a pharmacy claim. Other PBMs do not determine DIR fees at the claim settlement date, and therefore DIR fees are collected from pharmacies after claim settlement, often as clawbacks of reimbursements based on factors that vary from plan to plan. For example, two PBMs calculate DIR fees on a trimester basis and charge Progressive Care for these fees as reductions of reimbursements paid to Progressive Care two to three months after the end of the trimester (e.g., DIR fees for January – April 20xx claims were charged by these PBMs in July – August 20xx). For DIR fees that are not collected at the time of claim settlement, Progressive Care records an accrued liability at each reporting date for estimated DIR fees that are expected to be collected by the PBMs in a future period. The estimated liability for these fees is highly subjective and the actual amount collected may differ from the accrued liability. The uncertainty of management’s estimates is due to inadequate disclosure to Progressive Care by the PBMs as to exactly how these fees are calculated either at the time the DIR fees are actually assessed and reported to Progressive Care. The detail level of the disclosure of assessed DIR fees varies based on the information provided by the PBM.
Recent Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which introduces an impairment model based on expected, rather than incurred, losses. Additionally, it requires expanded disclosures regarding (a) credit risk inherent in a portfolio and how management monitors the portfolio’s credit quality; (b) management’s estimate of expected credit losses; and (c) changes in estimates of expected credit losses that have taken place during the period. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” This ASU clarifies receivables from operating leases are accounted for using the lease guidance and not as financial instruments. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” This ASU clarifies various scoping and other issues arising from ASU 2016-13. In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments.” This ASU improves the Codification and amends the interaction of Topic 842 and Topic 326. ASU 2016-13 and related amendments are effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted this guidance effective January 1, 2023 and the adoption had no material impact on our condensed consolidated financial statements and related disclosures. On an ongoing basis, the Company will contemplate forward-looking economic conditions in recording lifetime expected credit losses for the nine months ended September 30, 2017 andCompany’s financial assets measured at cost, such as such, currency rate variancesthe Company’s trade receivables.
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the condensed consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on results. For the nine months ended September 30, 2017 the net effect on revenues were impacted by the differences in exchange rate from yearly average exchangeor are unrelated to its financial condition, results of 1.39353 to 1.27500. Had the yearly average rate remained, sales for the nine months would have been higher by $287,576. GTCL comparable sales in GBP, its home currency, increased 21%operations, cash flows or £425,714, from £2,000,471 to £2,426,185, for the nine months ended September 30, 2017 as compared to September 30, 2016.disclosures.
Revenue Recognition
Subsequent Events
The Company has evaluated subsequent events through November [ ], 2023, the date the condensed consolidated financial statements were available to be issued. See Note [] for subsequent events that require disclosure in the condensed consolidated financial statements.
Note 4. Acquisition - Provisional
On July 1, 2023, the Company, along with Messrs. Fernandez and UnearnedBarreto, exercised common stock purchase warrants and were issued common stock shares by Progressive Care. The Company exercised common stock purchase warrants on a cashless basis and was issued 402,269 common stock shares. The Company also exercised common stock purchase warrants on a cash basis and paid consideration in the amount of $506,000 and was issued 230,000 common stock shares. Mr. Fernandez exercised common stock purchase warrants on a cashless basis and was issued 211,470 common stock shares. Mr. Barreto exercised common stock purchase warrants on a cashless basis and was issued 130,571 common stock shares. At the time of exercise, all of the above common stock purchase warrants were in-the-money. After the exercise of the common stock purchase warrants, the Company and Messrs. Fernandez and Barreto collectively owned approximately 53% of Progressive Care’s voting common stock.
Also, on July 1, 2023, the Company, along with Messrs. Fernandez and Barreto, entered into a voting agreement whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs. Fernandez and Barreto agreed to vote all of the common stock shares (including any new shares acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Common Stock) that they own, directly or indirectly, in the same manner that the Company votes its common stock and equivalents. The voting agreement is irrevocable and perpetual in term.
As a result of the common stock purchase warrant exercises and the entry into the voting agreement, the Company concluded that there was a change in control in Progressive Care. As of July 1, 2023, NextPlat has the right to control more than 50 percent of the voting interests in Progressive Care through the concurrent common stock purchase warrant exercises and voting agreement noted above. Beginning on July 1, 2023, the Company changed the accounting method for its investment in Progressive Care, which prior to July 1, 2023 had been accounted for as an equity method investment to consolidation under the voting interest model in FASB ASC Topic 805. Therefore, Progressive Care became a consolidated subsidiary of the Company on July 1, 2023.
Final purchase accounting adjustments may be materially different from the pro forma adjustments presented in this document. Increases or decreases in the fair value of the net assets may change the amount of the purchase price allocated to goodwill and other assets and liabilities. Measurement period adjustments will be recognized prospectively. The measurement period is not to exceed 12 months from the respective dates of acquisition.
Progressive Care contributed revenues of approximately $12.4 million and a net loss of approximately $1.4 million to the Company for the period from July 1, 2023 to September 30, 2023. The following unaudited pro forma summary presents consolidated information of NextPlat Corp as if the business combination had occurred on January 1, 2022.
For the Three Months Ended September 30, 2023 | For the Three Months Ended September 30, 2022 | |||||||
(Unaudited) | (Unaudited) | |||||||
Revenue | $ | 15,290,000 | $ | 12,775,000 | ||||
Earnings | $ | 4,076,000 | $ | (13,777,000 | ) | |||
For the Nine Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2022 | |||||||
(Unaudited) | (Unaudited) | |||||||
Revenue | $ | 44,071,000 | $ | 39,248,000 | ||||
Earnings | $ | (6,219,000 | ) | $ | (16,511,000 | ) | ||
The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.
The following table summarizes the consideration transferred to acquire a controlling interest in Progressive Care and the amounts of identified assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the noncontrolling interest in Progressive Care at the acquisition date:
Purchase Price Allocation | ||||
Total purchase consideration | $ | 11,465,000 | ||
Fair value of non-controlling interest | 15,957,000 | |||
Total consideration | $ | 27,422,000 | ||
Identifiable net assets acquired - Provisional: | ||||
Cash | $ | 7,352,000 | ||
Accounts receivable, net | 6,478,000 | |||
Accounts receivable, other | 506,000 | |||
Inventory | 1,631,000 | |||
Prepaid expenses | 220,000 | |||
Property and equipment, net | 2,883,000 | |||
Right of use assets, net | 405,000 | |||
Intangible assets, net: | ||||
Trade name | 4,060,000 | |||
Development technology | 2,560,000 | |||
Pharmacy records | 8,100,000 | |||
Other | - | |||
Deposits | 39,000 | |||
Accounts payable and accrued expenses | (8,196,000 | ) | ||
Notes payable and accrued interest - current portion | (149,000 | ) | ||
Lease liabilities - current portion | (208,000 | ) | ||
Notes payable - long term | (1,173,000 | ) | ||
Lease liabilities - long term | (230,000 | ) | ||
Net assets acquired | $ | 24,278,000 | ||
Goodwill | $ | 3,144,000 | ||
The total consideration is based on the fair value of Progressive Care’s common stock outstanding at July 1, 2023, which was 6,162,343 common shares outstanding and a fair market value of $4.45 per share.
As a result of NextPlat obtaining control over Progressive Care, NextPlat’s previously held equity interest in Progressive Care was remeasured to fair value, resulting in a gain of approximately $6.1 million, which has been recognized in the line item “Gain on remeasurement of fair value of equity interest in affiliate prior to acquisition” on the condensed consolidated statements of comprehensive income (loss).
The fair value of the noncontrolling interest of approximately $16.0 million and the fair value of the previously held equity interest of approximately $11.5 million in Progressive Care were estimated by applying a market approach and an income approach, respectively. These fair value measurements of the noncontrolling interest and the previously held equity interest are based on significant inputs not observable in the market, and thus represent Level 3 measurements. The fair value estimates for the noncontrolling interest and the previously held equity interest are based on (1) an assumed discount rate range of 10% to 11%, (2) an assumed terminal value based on long-term sustainable growth rates ranging from 3.0% to 4.8%,(3) assumed financial multiples of reporting entities deemed to be similar to Progressive Care, and (4) assumed adjustments because of the lack of control or lack of marketability, as relevant, that market participants would consider when estimating the fair value of the noncontrolling interest and the previously held equity interest in Progressive Care.
The goodwill is attributable to the workforce of the acquired business and the significant synergies expected to arise after NextPlat’s acquisition of a controlling interest in Progressive Care. The goodwill is not deductible for tax purposes.
Note 5. Fair Value
Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.
The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:
● | Cash, accounts receivable, and accounts payable and accrued liabilities: The amounts reported in the accompanying Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature. |
● | Notes payable and lease liabilities: The carrying amount of notes payable approximated fair value due to variable interest rates at customary terms and rates the Company could obtain in current financing. The carrying value of lease liabilities approximated fair value due to the implicit rate in the lease in relation to the Company’s borrowing rate and the duration of the leases (Level 2 inputs). |
Identifiable Intangible Assets
The initial recognition of the Progressive Care's identifiable intangible assets, resulting from the acquisition on July 1, 2023 and the application of push-down accounting, were measured using Level 3 inputs. The fair value at the date of acquisition was approximately $14.7 million.
Note 6. Revenue
e-Commerce revenue:
The Company recognizes revenue from satellite services when earned, as services are rendered or delivered to customers. Equipment sales revenue is recognized when the equipment is delivered to and accepted by the customer. Only equipment sales are subject to warranty. Historically, the Company has not incurred significant expenses for warranties.
The Company’s customers generally purchase a combination of our products Equipment sales which have been prepaid, before the goods are shipped are recorded as contract liabilities and services as part of a multiple element arrangement. The Company’s assessment of which revenue recognition guidance is appropriate to account for each element in an arrangement can involve significant judgment. This assessment has a significant impact ononce shipped and accepted by the amount and timing of revenue recognition.
Revenuecustomer is recognized when all of the following criteria have been met:
| as revenue. The | |
In accordance with ASC 605-25,Revenue Recognition—Multiple-Element Arrangements,based on the terms and conditions of the product arrangements, the Company believes that its products andalso records as contract liabilities, certain annual plans for airtime, which are paid in advance. Once airtime services can be accounted for separatelyare incurred, they are recognized as its products and services have value to the Company’s customers on a stand-alone basis. When a transaction involves more than one product or service, revenue is allocated to each deliverable based on its relative fair value; otherwise,revenue. Unbilled revenue is recognized as products are delivered or asfor airtime plans whereby the customer is invoiced for its data usage the following month after services are provided over the term of the customer contract.
Intangible assets
Intangible assets include customer contracts purchased and recorded based on the cost to acquire them. These assets are amortized over 10 years. Useful lives of intangible assets are periodically evaluated for reasonableness and the assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may no longer be recoverable.
Goodwill and other intangible assets
In accordance with ASC 350-30-65, “Intangibles - Goodwill and Others”, the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Factors the Company considers to be important which could trigger an impairment review include the following:
When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.
Property and Equipment
Property and equipment are carried at historical cost less accumulated depreciation. Depreciation is based on the estimated service lives of the depreciable assets and is calculated using the straight-line method. Expenditures that increase the value or productive capacity of assets are capitalized. Fully depreciated assets are retained in the property and equipment, and accumulated depreciation accounts until they are removed from service. When property and equipment are retired, sold or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Repairs and maintenance are expensed as incurred.
The estimated useful lives of property and equipment are generally as follows:
Impairment of long-lived assetsHealthcare revenue:
The Company reviews long-lived assetsrecognizes pharmacy revenue and 340B contract revenue from dispensing prescription drugs at the time the drugs are physically delivered to a customer or when a customer picks up their prescription or purchases merchandise at the store, which is the point in time when control transfers to the customer. Each prescription claim is considered an arrangement with the customer and is a separate performance obligation. Payments are received directly from the customer at the point of sale, or the customers’ insurance provider is billed electronically. For third-party medical insurance and other claims, authorization is obtained to ensure payment from the customer’s insurance provider before the medication is dispensed to the customer. Authorization is obtained for impairment whenever events or changes in circumstances indicate thatthese sales electronically and a corresponding authorization number is issued by the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not consider it necessary to record any impairment charges during the periods ended September 30, 2017 and December 31, 2016, respectively.
Fair value of financial instrumentscustomers’ insurance provider.
The Company adopted Financial Accounting Standards Boardaccrues an estimate of pharmacy benefit manager (“FASB”PBM”) Accounting Standards Codificationfees, including direct and indirect remuneration (“ASC”DIR”) 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair valuefees, which are assessed or expected to be applied to existing US GAAP that require the useassessed by payers at some point after adjudication of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.
ASC 820 defines fair valueclaim, as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participantsreduction of revenue at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3: Unobservable inputs for which theretime revenue is little or no market data, which require the use of the reporting entity’s own assumptions.
The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable input (Level 3) from January 1, 2017 to September 30, 2017:
Conversion Feature Derivative Liability | Warrant Liability | Total | ||||||||||
| Balance at January 1, 2017 | $ | - | $ | 1,237 | $ | 1,237 | ||||||
| Change in fair value included in earnings | - | (1,237 | ) | (1,237 | ) | |||||||
| Balance September 30, 2017 | $ | - | $ | - | $ | - | ||||||
The Company did not identify any other assets or liabilities that are required to be presented on the condensed consolidated balance sheets at fair value in accordance with the accounting guidance. The carrying amounts reportedrecognized. Changes in the balance sheet for cash, accounts payable, and accrued expenses approximate their estimated fair market value based on the short-term maturityestimate of the instruments.
Stock Based Compensation
Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.
Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.
Income Taxes
The Company has adopted Accounting Standards Codification subtopic 740-10,Income Taxes (“ASC740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowancessuch fees are recorded as an adjustment to reducerevenue when the deferred tax assets to an amount that will more likely than not be realized.change becomes known.
The Company followsrecognizes COVID-19 testing revenue when the provision of ASC 740-10 relatedtests are performed and results are delivered to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordancecustomer. Each test is considered an arrangement with the guidance of ASC 740-10,customer and is a separate performance obligation. Payment is generally received in advance from the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.customer.
The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.following table disaggregates net revenues by categories:
The Company has adopted ASC 740-10-25, “Definition of Settlement”, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed.
Three Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
Sales of products, net: | ||||||||
Pharmacy prescription and other revenue, net of PBM fees | $ | 9,887,890 | $ | - | ||||
e-Commerce revenue | 2,930,721 | 2,630,826 | ||||||
Sub total | 12,818,611 | 2,630,826 | ||||||
Revenues from services: | ||||||||
Pharmacy 340B contract revenue | 2,471,560 | - | ||||||
Revenues, net | $ | 15,290,171 | $ | 2,630,826 | ||||
Nine Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
Sales of products, net: | ||||||||
Pharmacy prescription and other revenue, net of PBM fees | $ | 9,887,890 | $ | - | ||||
e-Commerce revenue | 8,764,237 | 9,080,083 | ||||||
Sub total | 18,652,127 | 9,080,083 | ||||||
Revenues from services: | ||||||||
Pharmacy 340B contract revenue | 2,471,560 | - | ||||||
Revenues, net | $ | 21,123,687 | $ | 9,080,083 | ||||
Note 7.Earnings (Loss) per Common Share
Net income (loss) per common share is calculated in accordance with ASCAccounting Standards Codification (“ASC”) Topic 260: Earnings per Share (“ASC 260”). Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding as they would be anti-dilutive. For the three months and nine months ended September 30, 2017 and September 30, 2016, respectively,In periods where the Company hadhas a net loss, therefore all dilutive securities are excluded.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net income (loss) attributable to NextPlat Corp common shareholders | $ | 3,447,653 | $ | (5,713,276 | ) | $ | (2,080,318 | ) | $ | (8,219,220 | ) | |||||
Basic weighted average common shares outstanding | 18,702,857 | 9,469,509 | 17,079,077 | 9,310,936 | ||||||||||||
Potentially dilutive common shares | 1,592,692 | - | - | - | ||||||||||||
Diluted weighted average common shares outstanding | 20,295,549 | 9,469,509 | 17,079,077 | 9,310,936 | ||||||||||||
Basic weighted average earnings (loss) per common share | $ | 0.18 | $ | (0.60 | ) | $ | (0.12 | ) | $ | (0.88 | ) | |||||
Diluted weighted average earnings (loss) per common share | $ | 0.17 | $ | (0.60 | ) | $ | (0.12 | ) | $ | (0.88 | ) | |||||
Potentially dilutive common shares excluded from the calculation of diluted weighted average loss per common share: | ||||||||||||||||
Stock options | - | 273,607 | 156,327 | 292,959 | ||||||||||||
Common stock purchase warrants | - | - | 876,042 | - | ||||||||||||
| - | 273,607 | 1,032,369 | 292,959 | |||||||||||||
The following are dilutive common stock equivalents during the period ended:
| September 30, 2017 | September 30, 2016 | |||||||
| Convertible preferred stock | 366,207,379 | 209,416,215 | ||||||
| Stock options | 42,850,000 | 2,850,000 | ||||||
| Stock warrants | - | 5,000 | ||||||
| Total | 409,057,379 | 212,271,215 | ||||||
Related Party TransactionsNote 8. Accounts Receivable
A party is considered to be related to At September 30, 2023 and December 31, 2022, accounts receivable consisted of the following:
September 30, 2023 | December 31, 2022 | |||||||
(Unaudited) | (Audited) | |||||||
Gross accounts receivable – trade | $ | 8,039,121 | $ | 383,786 | ||||
Less: allowance for doubtful accounts | (237,000 | ) | - | |||||
Accounts receivable – trade, net | $ | 7,802,121 | $ | 383,786 | ||||
Bad debt expense was approximately $12,000 and $- for the three and nine months ended September 30, 2023 and 2022, respectively.
Accounts receivable – trade, net for the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal ownersas of January 1, 2022 and September 30, 2022 were approximately $0.3 million and $0.7 million, respectively.
Note 9. Inventory
At September 30, 2023 and December 31, 2022, inventory consisted of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
Reclassificationsfollowing:
Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation. These reclassifications had no effect on previously reported results of operations. The Company reclassified certain expense accounts to conform to the currents year’s treatment.
Recent Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The amendments to this update supersede nearly all existing revenue recognition guidance under GAAP, including the revenue recognition requirements in ASC Topic 605, “Revenue Recognition.”- The standard was originally set to become effective in annual periods beginning after December 15, 2016 and for interim and annual reporting periods thereafter. In August 2015, the FASB issued ASU 2015-14“Revenue from Contracts with Customers; Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 for all entities by one year, thereby delaying the effective date of the standard to January 1, 2018, with an option that would permit companies to adopt the standard as early as the original effective date. Early adoption prior to the original effective date is not permitted. The core principle of this Topic is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. This Topic defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company is currently assessing the impact of ASU 2014-09 on our consolidated financial statements to be completed by the end of 2017.
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 2 - GOING CONCERN CONSIDERATIONS
September 30, 2023 | December 31, 2022 | |||||||
(Unaudited) | (Audited) | |||||||
Finished goods | $ | 5,026,734 | $ | 1,286,612 | ||||
Less reserve for obsolete inventory | (40,000 | ) | - | |||||
Total | $ | 4,986,734 | $ | 1,286,612 | ||||
The accompanying unaudited condensed consolidated financial statements are prepared assumingincrease in inventory was attributable to the Company will continueconsolidation of Progressive Care as a going concern. At September 30, 2017, the Company had an accumulated deficit of approximately $8,210,745, working capital of approximately $161,768 and net loss of approximately $3,609,339 during the nine months ended September 30, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The ability of the Company to continue as a going concern is dependent upon obtaining additional capital and financing. Management intends to attempt to raise additional funds by way of a public or private offering. While the Company believes in the viability of its strategy to raise additional funds, there can be no assurances to that effect. The unaudited condensed consolidated financial statements do not include any adjustments relating to classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.July 1, 2023.
Note 10. VAT Receivable On EU countries. Prepaid expenses current and long term amounted to Note 12. Property and Equipment, net September 30, 2023 December 31, 2022 (Unaudited) (Audited) Building Vehicles Office furniture and fixtures Land Leasehold improvements Computer equipment Rental equipment Appliques Website development Property and equipment gross Less: accumulated depreciation Property and equipment, net Depreciation expense was approximately $540,000 and $329,000 for The increase in property and equipment was attributable to the consolidation of Note 13. Intangible Assets, net - Provisional Intangible assets, net consisted of the following: September 30, 2023 December 31, 2022 (Unaudited) (Audited) Pharmacy records Trade names Developed technology Customer Contracts Subtotal Less: accumulated amortization Net intangible assets Amortization of customer contracts Year 2023 (remaining three months) 2024 2025 2026 2027 Thereafter Total The On In addition, on August 30, 2022, NextPlat Corp, Messrs. Fernandez and Barreto, and certain other investors (collectively, the “NextPlat Investors”) entered into a On November 11, 2022, Mr. Weisberg resigned from his positions as Progressive Care’s Chief Executive Officer and co-Vice-Chairman of the Board of Directors. On the same date, the Board appointed Mr. Fernandez to serve as the new Chief Executive Officer immediately. On December On May 5, 2023, NextPlat entered into a Securities Purchase Agreement (the “SPA”) with Progressive Care, pursuant to which the Company Simultaneous with the closing, Progressive Care entered into a Debt Conversion Agreement (the “DCA”) with NextPlat and the other holders (the “Holders”) of At the same time, Progressive Care and NextPlat entered into a First Amendment (the “Amendment”) to that certain Securities Purchase Agreement dated November 16, 2022 (the “Debenture Purchase Agreement”). Under the Debenture Purchase Agreement, Progressive Care agreed to issue, and NextPlat Corp agreed to purchase, from time to time during the As a result of the common stock purchase warrant exercises and the entry into the voting agreement as The following summarizes the Company’s consolidated balance sheet description equity method investment as follows as of September 30, 2023: Carrying Amount December 31, 2022, beginning balance Investment in Progressive Care Inc. and Subsidiaries Gain on equity method investment Portion of loss from Progressive Care, Inc. and Subsidiaries Depreciation expense due to cost basis difference (1) Interest earned from convertible note receivable Interest earned from amortization of premium on convertible note receivable Elimination of intercompany interest earned Change in accounting method as of July 1, 2023 September 30, 2023, carrying amount The following summarizes the Company’s consolidated statements of operations and comprehensive loss description equity in net loss of affiliate for the six months ended June 30, 2023 as follows: For the six months ended June 30, 2023 Portion of loss from Progressive Care, Inc. and Subsidiaries Depreciation expense due to cost basis difference (1) Interest earned from convertible note receivable Interest earned from amortization of premium on convertible note receivable Elimination of intercompany interest earned Equity in net loss of affiliate Note 15. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following: September 30, 2023 December 31, 2022 (Unaudited) (Audited) Accounts payable Accrued wages and payroll liabilities Accrued PBM fees Rental deposits Customer deposits payable VAT liability & sales tax payable U.K. income tax payable Accrued legal fees Pre-merger accrued other liabilities Accrued interest Accrued other liabilities Total The increase in accounts payable and accrued expenses was attributable to the consolidation of Progressive Care at July 1, 2023. Note 16. Notes Payable Notes payable consisted of the following: September 30, 2023 December 31, 2022 A. Mortgage note payable - commercial bank - collateralized B. Note payable - uncollateralized C. Notes payable - collateralized Insurance premiums financing Subtotal Less: current portion of notes payable Long-term portion of notes payable (A) Mortgage Note Payable – collateralized In 2018, Progressive Care closed on the purchase of land and building located at 400 Ansin Boulevard, Hallandale Beach, Florida. The purchase price was financed in part through a mortgage note and security agreement entered into with a commercial lender in the amount of $1,530,000. The promissory note is collateralized by the (B) Note Payable – Uncollateralized As of September 30, 2023 the (C) Notes Payable – Collateralized On In April 2021, Progressive Care entered into a note obligation with a commercial lender, the proceeds from which were used to purchase pharmacy equipment in the amount of approximately $30,000. During September 2021, pharmacy equipment was returned since the installation was cancelled and the note was amended. The amended promissory note payable requires 46 monthly payments of $331, including interest at 6.9%. The balance outstanding as of September 30, 2023 on the note payable was approximately $6,500. In July 2022, Progressive Care entered into a note obligation with a commercial lender, the proceeds from which were used to purchase pharmacy equipment in the amount of approximately $90,000. The terms of the promissory note payable require 60 monthly payments of $1,859, including interest at 8.78% starting January 2023. The balance outstanding on the note payable was approximately $78,000 as of September 30, 2023. In September 2022, Progressive Care entered into a note obligation with a commercial lender, the proceeds from which were used to purchase a vehicle in the amount of approximately $25,000. The terms of the promissory note payable require 24 monthly payments of $1,143, including interest at 8.29% starting October 2022. The balance outstanding on the note payable was approximately $13,000 as of September 30, 2023. Principal outstanding as of September 30, 2023, is expected to be repayable as follows: Year Amount 2023 (remaining three months) 2024 2025 2026 2027 Thereafter Total The increase in notes payables was attributable to the consolidation of Progressive Care at July 1, 2023. Note 17.Equity Preferred Stock We have authorized 3,333,333 shares of $0.0001 par value of preferred stock. No preferred stock was outstanding for any year presented. As of September 30, 2023, there were no shares of preferred stock issued and outstanding. Common Stock We have authorized 50,000,000 shares of $0.0001 par value common stock. As of September 30, 2023, 18,724,596 shares of common stock were issued and outstanding. Listing on the Nasdaq Capital Market Our common stock and warrants have been trading on the Nasdaq Capital Market under the symbols “NXPL” and “NXPLW,” respectively, since January 21, 2022. Prior to January 21, 2022, our common stock and warrants were traded on the Nasdaq Capital Market under the symbols “OSAT” and “OSATW,” respectively. April 2023 Private Placement of Common Stock On April 5, 2023, the Company entered into a For the nine months ended September 30, 2023 and 2022, stock-based compensation expense recognized in selling, general and administrative expenses was approximately $4.6 million and $2.0 million, respectively. There were no income tax benefits recognized from stock-based compensation during the nine months ended September 30, 2023 and 2022 due to cumulative losses and valuation allowances. Note 18. Related Party Transactions On February 1, 2023, the Company entered into a Management Services Agreement with Progressive Care Inc. (“Progressive Care”) to provide certain management and administrative services to Progressive Care for a $25,000 per month fee. During May 2023 the management fee was reduced to $20,000 per month. During the nine months ended September 30, 2023, the Company received $175,000 from Progressive Care as management fees. On July 12, 2022, the Company hired Lauren Sturges Fernandez, the spouse of Mr. On August 30, 2022, NextPlat, Charles M. Fernandez, Rodney Barreto, and certain other purchasers purchased from Iliad Research a Secured Convertible Promissory Note, dated March 6, 2019, made by Progressive Care to Iliad (the “Note”). The accrued and unpaid principal and interest under the note at the time of the purchase was approximately $2.8 million. In connection with the Note Purchase, NextPlat, Messrs. Fernandez and Barreto and the other purchasers of the Note entered into a Debt Modification Agreement with Progressive Care. In consideration of the concessions in the Debt Modification Agreement, Progressive Care issued 105,000 shares of its common stock to the purchasers of the Note, of which NextPlat, Messrs. Fernandez and Barreto, received 45,653, 18,261, and 18,261 shares, respectively. On May 5, 2023, the Company entered into an SPA with Progressive Care Inc., pursuant to which the Company agreed to purchase 455,000 newly issued Units of securities from Progressive Care at a price per Unit of $2.20 for an aggregate purchase price of $1.0 million (the “Unit Purchase”). Each Unit consists of one share of common stock, par value $0.0001 per share, Common Stock and one common stock purchase warrant to purchase a share of Common Stock (the “PIPE Warrants”). On May 9, 2023, pursuant to the DCA, the Company received 570,599 shares, Charles M. Fernandez received 228,240 shares, and Rodney Barreto received 228,240 shares. To induce the approval of the debt conversion pursuant to the DCA, Messrs. Fernandez and Barreto received Inducement Warrants to purchase 190,000 and 30,000 shares of Common Stock, respectively. In addition, the Company and Messrs. Fernandez and Barreto also received a common stock purchase warrant to purchase one share of Common Stock for each share of Common Stock they received upon conversion of the Note. On July 1, Note 19. Commitments and Contingencies Litigation On June 22, 2021, Thomas Seifert’s employment as the Company’s Chief From time to time, the Company may become involved in litigation relating to claims arising out of our operations in the normal course of business. The Company is not currently involved in any pending legal proceeding or litigation, and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which the Company is a party or to which any of the Company’s properties is subject, which would reasonably be likely to have a material adverse effect on the Company’s business, financial condition and operating results. On June 8, 2022, a complaint was filed by Progressive Care against KeyCentrix, LLC (“KCL”), in the U.S. District Court for the Southern District of Florida, alleging fraudulent inducement, breach of express warranty and breach of implied warranty. The complaint stems from an agreement by KCL to license to Progressive Care certain pharmacy management software known as “Newleaf” for use in the operations of pharmacies operated by the Company. Note 20. Leases The Company has entered into a number of lease arrangements under which the Company is the lessee. These leases are classified as operating leases. In addition, the Company has elected the short-term lease practical expedient in ASC Topic 842 related to real estate leases with terms of one year. The following is a summary of the Company’s lease arrangements. Finance Lease Agreements In In Operating Lease Agreements On For our facilities in Poole, England, we rent office and warehouse space of approximately 2,660 square feet for £30,000 annually or approximately USD $37,107, based on a yearly average exchange The The rate implicit to the Florida lease is not readily determinable, and we therefore use our incremental borrowing rate to determine the present value of the lease payments. The weighted average incremental borrowing rate used to determine the initial value of right of use (ROU) assets and lease liabilities for the We monitor for events or changes in circumstances that require a reassessment of one of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss. Progressive Care entered into a lease agreement for its Orlando pharmacy in August 2020. The term of the lease is 66 months with a termination date of February 2026. The lease agreement calls for monthly payments that began in February 2021, of $4,310, with an escalating payment schedule each year thereafter. Progressive Care leases its North Miami Beach pharmacy location under an operating lease agreement with a lease commencement date in September 2021. The term of the lease is 60 months with a termination date in August 2026. The lease calls for monthly payments of $5,237, with an escalating payment schedule each year thereafter. Progressive Care also leases its Palm Beach County pharmacy locations under operating lease agreements expiring in February 2024. The increase in leases was attributable to the consolidation of Progressive Care at July 1, 2023. Note 21. Reportable Segments The Company has Three Months Ended September 30, 2023 Pharmacy prescription and other revenue, net of PBM fees e-Commerce revenue Pharmacy 340B contract revenue Revenues, net Expenses: Cost of revenue Selling, general and administrative Salaries, wages and payroll taxes Professional fees Depreciation and amortization Loss before other (income) expense For the Nine Months Ended September 30, 2023 Pharmacy prescription and other revenue, net of PBM fees e-Commerce revenue Pharmacy 340B contract revenue Revenues, net Expenses: Cost of revenue Selling, general and administrative Salaries, wages and payroll taxes Professional fees Depreciation and amortization Loss before other (income) expense e-Commerce Operations Healthcare Operations Eliminations Total Total assets as of September 30, 2023 Note 22. Concentrations e-Commerce operations concentrations: Customers: Sales to customers through Amazon accounted for 53.0% and 59.2% of the Company’s revenues during the nine months ended September 30, 2023 and 2022, respectively. No other customer accounted for 10% or more of the Company’s revenues Suppliers: The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s purchases for the three months ended September 30, For the Three Months Ended September 30, 2023 For the Three Months Ended September 30, 2022 Globalstar Europe % % Garmin % % Network Innovations % % Satcom Global % % % % For the Nine Months Ended September 30, 2023 For the Nine Months Ended September 30, 2022 Iridium Satellite % % Globalstar Europe % % Garmin % % Network Innovations % % Cygnus Telecom % % Geographic: The For the Three Months Ended September 30, 2023 For the Three Months Ended September 30, 2022 Europe % % North America % % South America % % Asia and Pacific % % Africa % % % % The following table sets forth revenue as to each geographic location, for the nine months ended September 30, 2023 and 2022 (unaudited): For the Nine Months Ended September 30, 2023 For the Nine Months Ended September 30, 2022 Europe % % North America % % South America % % Asia and Pacific % % Africa % % % % Healthcare operations concentrations: Suppliers: Progressive Care had significant concentrations with one vendor. The purchases from this significant vendor were 99% of total vendor purchases for the Customers: Progressive Care s trade receivables are primarily from prescription medications billed to various insurance providers. Ultimately, the insured is responsible for payment should the insurance company not reimburse Progressive Care. Progressive Care generated reimbursements from three significant PBMs: Three Months Ended September 30, 2023 A B C Note 23. Subsequent Events October 12, 2023, NextPlat Corp entered into a Distribution Agreement with OPKO HEALTH Spain, S.L.U. (“OPKO”) to market and resell certain OPKO health and veterinary products (the "Products") through the Alibaba platform in China (the "Distribution Agreement"). Under the Distribution Agreement, the Company was appointed as The following information should be read in conjunction with the You should We encourage you to review our periodic reports filed with the SEC and included in the SEC’s Business acquisition of Progressive Care, Inc. On In addition, on August 30, 2022, NextPlat Corp, Messrs. Fernandez and Barreto, and certain other investors (collectively, the “NextPlat Investors”) entered into a Modification Agreement wherein the terms were modified for an existing Secured Convertible Promissory Note (the “Note”) originally held by a third party note holder and sold to the NextPlat Investors. The NextPlat Investors purchased the Note as part of a Confidential Note Purchase and Release Agreement between the former note holder and the NextPlat Investors. As of the date of the SPA, the aggregate amount of principal and interest outstanding on the Note was approximately $2.8 million. As part of the Modification Agreement, various terms of the Note were modified, among them, the Conversion Price for the Note was modified to a fixed price of $4.00 per share of common stock (after giving effect to the Reverse Stock Split described below). In addition, the Note was modified to provide for mandatory conversion upon the later to occur of (a) the completion of the Company’s reverse stock split, and (b) the listing of the Company’s common stock on a national exchange, including the Nasdaq Capital Market, the Nasdaq Global Market, or the New York Stock Exchange. Also, pursuant to On On On May 5, 2023, NextPlat entered into a Securities Purchase Agreement (the “SPA”) with Progressive Care, pursuant to which NextPlat purchased 455,000 newly issued units of securities from Progressive Care (the “Units”) at a price per Unit of $2.20 for an aggregate purchase price of $1 million (the “Unit Purchase”). Each Unit consisted of one share of common stock, par value $0.0001 per share, of Progressive Care and one warrant to purchase a share of common stock (the “PIPE Warrants”). The PIPE Warrants have a three-year term and are immediately Simultaneous with the closing, Progressive Care entered into a Debt Conversion Agreement (the “DCA”) with NextPlat and the other holders (the “Holders”) of that certain Amended and Restated Secured Convertible Promissory Note, dated as of September 2, 2022, made by the Company in the original face amount of approximately $2.8 million (the “Note”). Pursuant to the On July 1, 2023, NextPlat, along with Messrs. Fernandez and Barreto, exercised common stock purchase warrants and were issued common stock shares by Progressive Care. NextPlat exercised common stock purchase warrants on a cashless basis and was issued 402,269 common stock shares. NextPlat also exercised common stock purchase warrants on a cash basis and paid consideration in the amount of $506,000 and was issued 230,000 common stock shares. Mr. Fernandez exercised common stock purchase warrants on a cashless basis and was issued 211,470 common stock shares. Mr. Barreto exercised common stock purchase warrants on a cashless basis and was issued 130,571 common stock shares. At the time of exercise, all of the above common stock purchase warrants were in-the-money. After the exercise of the common stock purchase warrants, NextPlat, Messrs. Fernandez and Barreto collectively owned approximately 53% of Progressive Care’s voting common stock. Also, on July 1, 2023, NextPlat, along with Messrs. Fernandez and Barreto, entered into a voting agreement whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs. Fernandez and Barreto agreed to vote all of the common stock shares (including any new shares acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Common Stock) that they own, directly or indirectly, in the same manner that NextPlat votes As a result of the e-Commerce Operations: Leveraging the e-commerce experience of the Company’s management team and the Company’s existing e-commerce platforms, the Company has embarked upon the rollout of a state-of-the-art e-commerce platform to collaborate with e-Commerce transaction volumes at the Company’s owned and operated websites in the UK and Unites States continued to grow throughout the third quarter setting monthly performance records. Healthcare Operations: Progressive Care, through its wholly owned subsidiaries, currently owns and operates five pharmacies, which generate most of its pharmacy revenues, which is derived from dispensing medications to their patients. Progressive Care also provides patient health risk reviews and free same-day delivery. Progressive Care provides TPA, data management, COVID-19 related diagnostics and vaccinations, prescription pharmaceuticals, compounded medications, telepharmacy services, anti-retroviral medications, medication therapy management, the supply of prescription medications to long-term care facilities, medication adherence packaging, contracted pharmacy services for 340B covered entities under the 340B Drug Discount Pricing Program, and health practice risk management. Progressive Care are focused on improving the lives of patients with complex chronic diseases through a patient and provider engagement and their partnerships with payors, pharmaceutical manufacturers, and distributors. Progressive Care offer a broad range of solutions to address the dispensing, delivery, dosing, and reimbursement of clinically intensive, high-cost drugs. Progressive Care’s pharmacies also provides contracted pharmacy services for 340B covered entities under the 340B Drug Discount Pricing Program. Under the terms of these agreements, Progressive Care’s pharmacies act as a pass-through for reimbursements on prescription claims adjudicated on behalf of the 340B covered entities in exchange for a dispensing fee per prescription. These fees vary by the covered entity and the level of services provided by Progressive Care. Progressive Care’s focus is on complex chronic diseases that generally require multiyear or lifelong therapy, which drives recurring revenue and sustainable growth. Progressive Care’s pharmacy services revenue growth is from expanding their services, new drugs coming to market, new indications for existing drugs, volume growth with current clients, and additions of new customers due to their focus on higher patient engagement, benefit of free delivery to the patient, and clinical expertise. The pharmacies also expanded revenue growth through the signing of new contract pharmacy service and data management contracts with 340B covered entities. Progressive Care provides data management and TPA services for 340B covered entities, pharmacy analytics, and programs to manage HEDIS Quality Measures including Medication Adherence. These offerings cater to the need for frontline providers to understand best practices, patient behaviors, care management processes, and the financial mechanisms behind these decisions. ClearMetrX provides data access, and actionable insights that providers and support organizations can use to improve their practice and patient care. ClearMetrX's TPA services include management of wholesale accounts, patient eligibility with regard to the 340B drug program, development and review of 340B policies and procedures, and management of receivables. Critical Accounting Policies and Estimates The Goodwill Goodwill represents the excess of the purchase price of over the value assigned to net tangible and identifiable intangible assets. Progressive Care is considered to be the reporting unit for goodwill. Acquired intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite. For intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded values. Valuation techniques consistent with the market approach, income approach, and/or cost approach are used to measure fair value. Goodwill and other indefinite-lived intangible assets are assessed annually for impairment in the fourth fiscal quarter and in interim periods if events or changes in circumstances indicate that the assets may be impaired. The three month results of operations ended September 30, 2023 include results of operations for the Progressive Care subsidiary for the period from the date of acquisition, July 1, 2023, to September 30, 2023. The three month results of operations ended September 30, 2022 include only NextPlat Corp and its wholly owned subsidiaries and do not include Progressive Care. Results of Operations for the Three Months Ended September 30, 2023 2022 (Unaudited) (Unaudited) $ Change % Change Revenue, net Cost of revenue Gross profit Operating expenses Loss before other (income) expense Other (income) expense Loss before income taxes Income taxes Loss before equity method investment Gain on equity method investment Equity in net loss of affiliate Net income (loss) Net loss attributable to noncontrolling interest Net loss attributable to NextPlat Corp. For the three months ended September 30, Gross profit margins increased from approximately 25.8% for the three months ended September 30, 2022, to 30.0% for the three months ended September 30, 2023. The increase in gross profit margins during the third quarter of 2023 compared to the same period in 2022, was primarily attributable to the healthcare operations as a result of the Progressive Care acquisition on July 1, 2023. Loss before other (income) expense increased by approximately $1.3 million for the three months ended September 30, 2023, when compared to the three months ended September 30, 2022 , as a result of the increase in gross profit of approximately $3.9 million, partially offset by the increase in operating expenses of approximately $5.2 million. See detailed discussion below. Revenue Our revenues Three Months Ended September 30, 2023 2022 Dollars % of Revenue Dollars % of Revenue $ Change % Change Sales of products, net: Pharmacy prescription and other revenue, net of PBM fees % % % e-Commerce revenue % % % Sub total % % % Revenues from services: Pharmacy 340B contract revenue % % % Revenues, net % % % Sales for the three months ended September 30, 2023, consisted primarily of e-Commerce sales of satellite phones, tracking devices, accessories, airtime plans, and pharmacy prescription, and 340B contract revenues. For the three months ended September 30, 2023, overall revenues were approximately Total pharmacy prescription and 304B contract revenues were Operating Three Months Ended September 30, 2023 2022 (Unaudited) (Unaudited) $ Change % Change Selling, general and administrative % Salaries, wages and payroll taxes % Professional fees % Depreciation and amortization % Operating expenses % Total operating expenses for the three months ended September 30, Selling, general and administrative (“SG&A”) expenses were Salaries, wages and payroll taxes were approximately $2.5 million and $0.7 million for the three months ended September 30, 2023 and 2022, respectively, an increase of approximately $1.8 million or 281.4%. The increase was mainly attributable to the healthcare operations as a result of the Progressive Care acquisition as of July 1, 2023, of approximately $1.9 million, offset by a decrease in e-Commerce salaries and wages of approximately $0.1 million. Professional fees were approximately $0.5 million and $0.4 million for the three months ended September 30, 2023 and 2022, respectively, an increase of approximately $164.4 thousand or 46.1%. The increase was mainly attributable to legal and consulting fees as it relates to the healthcare operations as a result of the Progressive Care acquisition as of July 1, 2023, of approximately $0.3 million, offset by non-recurring legal and consulting fees associated with the e-Commerce business of approximately $0.1 million. Depreciation and amortization expenses were approximately $0.8 million and $0.1 million for the three months ended September 30, 2023 and 2022, respectively, an increase of approximately $0.7 million or 538.3%. The increase was mainly attributable to depreciation and amortization as it relates to the healthcare operations from the Progressive Care acquisition on July 1, 2023, of approximately $0.7 million. Total Other (Income) Expense. Our total other (income) expense decreased by approximately $0.1 million for the three months ended September 30, 2023 when compared to same period in 2022, and was mainly due to interest received, which was offset by unfavorable impact of fluctuations in foreign exchange rates. Equity Method Investment. We recorded a net gain in equity of our affiliate, Progressive Care, of approximately $6.1 million for the three months ended September 30, 2023, as a result of a change in the accounting treatment from equity method to consolidation as of July 1, 2023. See Note 14 – Equity Method Investment. For the three months ended September 30, 2022, we recorded a net loss in the equity of our affiliate, Progressive Care, of approximately $3.5 million which was accounted for as an equity method investment. Net Income (Loss). We recorded net income of approximately $2.6 million for the three months ended September 30, 2023 and a net loss of approximately ($5.7 million) for the three months ended September 30, 2022. The increase was a result of the factors described above. Comprehensive Income. We recorded comprehensive (gains) losses for foreign currency translation adjustments of approximately ($0.2 million) and $0.1 million for the three months ended September 30, 2023 and 2022, respectively. The change was primarily attributed to exchange rate variances. Results of Operations for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 Nine Months Ended September 30, 2023 2022 (Unaudited) (Unaudited) $ Change % Change Revenue, net Cost of revenue Gross profit Operating expenses Loss before other (income) expense Other (income) expense Loss before income taxes Income taxes Loss before equity method investment Gain on equity method investment Equity in net loss of affiliate Net loss Net loss attributable to noncontrolling interest Net loss attributable to NextPlat Corp. For the nine months ended September 30, Gross profit margins increased from approximately 22.5% for the nine months ended September 30, 2022, to 28.6% for the nine months ended September 30, 2023. The increase in gross profit margins during the first three quarters of 2023 compared to the same period in 2022, was primarily attributable to the healthcare operations as a results of the Progressive Care acquisition as of July 1, 2023. Loss before other (income) expense increased by approximately $3.5 million for the nine months ended September 30, 2023, when compared to the nine months ended September 30, 2022, as a result of the increase in gross profit of approximately $4.0 million, partially offset by the increase in operating expenses of approximately $7.5 million. See detailed discussion below. Our revenues were as follows: Nine Months Ended September 30, 2023 2022 Dollars % of Revenue Dollars % of Revenue $ Change % Change Pharmacy prescription and other revenue, net of PBM fees $ 9,887,890 47 % $ - - % $ 9,887,890 100 % e-Commerce revenue 8,764,237 41 % 9,080,083 100 % (315,846) (3) % Sub total 18,652,127 88 % 9,080,083 43 % 9,572,044 105 % Revenues from services: Pharmacy 340B contract revenue 2,471,560 12 % - - % 2,471,560 100 % Revenues, net $ 21,123,687 100 % $ 9,080,083 100 % 12,043,604 133 % Sales for the nine months ended September 30, 2023, consisted primarily of e-Commerce sales of satellite phones, tracking devices, accessories, airtime plans, and Total e-Commerce revenues were approximately $8.8 million and Total pharmacy prescription and 304B contract revenues were approximately $12.4 million for the three months ended September 30, Operating Expenses. Nine Months Ended September 30, 2023 2022 (Unaudited) (Unaudited) $ Change % Change Selling, general and administrative % Salaries, wages and payroll taxes % Professional fees % Depreciation and amortization % Operating expenses % Total operating expenses for the nine months ended September 30, Salaries, wages and payroll taxes were approximately $4.0 million and $2.0 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of approximately $2.1 million or 106.3%. The increase for the nine months ended September 30, 2023, when compared to the same periods in 2022, was mainly attributable to executive bonus payments, salary increases, and severance payments of approximately $0.2 million and the healthcare operations as a result of the Progressive Care acquisition as of July 1, 2023, of approximately $1.9 million. Professional fees were approximately $1.4 million and $0.8 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of approximately $0.6 million or 65.0%. The increase for the nine months ended September 30, 2023, when compared to the same period in 2022, was mainly attributable to legal fees associated with the capital raise in April 2023, the annual meeting held during the second quarter of 2023, and consulting fees as it relates to the e-Commerce operations of approximately $0.3 million, and legal and consulting fees as it relates to the healthcare operations from Progressive Care acquisition on July 1, 2023, of approximately $0.2 million. Depreciation and amortization expenses were We expect our expenses in each of these areas to continue to increase during fiscal Total Other (Income) Our total other (income) foreign exchange rates. We recorded Net Loss. We recorded net loss of approximately $2.9 million and $8.2 million for the nine months ended September 30, Comprehensive We recorded Liquidity and Capital Resources Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Our current assets at September 30, Our current liabilities at September 30, For the Nine Months Ended September 30, 2023 2022 Net change in cash from: Operating activities Investing activities Financing activities Effect of exchange rate on cash Change in cash Cash at end of period Cash Flow from Operating Activities Net cash flows used - favorable change in net loss of - unfavorable change in - unfavorable change in operating assets of approximately $6.3 million and mainly a result of increased accounts receivable and inventory due to the acquisitions of Progressive Care as of July 1, 2023; - favorable change in operating liabilities of Cash Flow from Investing Activities Net cash flows provided by (used in) - cash acquired in the acquisition of Progressive Care of approximately $7.4 million; - non-recurring capital contributions of approximately $5.5 million to equity method investee, Progressive Care (approximately $1.5 million in 2023 vs. $7.0 million in 2022). Cash Flow from Financing Activities Net cash flows provided by financing activities were Off-Balance Sheet Arrangements We do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders. Our company has not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under which we have ● an obligation under a ● a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets, ● any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, or ● any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us. ITEM 3. QUANTITATIVE AND As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are not required to provide the information required by this Item. ITEM 4. CONTROLS AND (b) Inherent Limitations on Controls. Management, including the CEO and On June 8, 2022, a complaint was filed by Progressive Care against KeyCentrix, LLC (“KCL”), in the U.S. District Court for the Southern District of Florida, alleging fraudulent inducement, breach of express warranty and breach of implied warranty. The complaint stems from an agreement by KCL to license to Progressive Care certain pharmacy management software known as “Newleaf” for use in the operations of pharmacies operated by the Company. From time to time, the Company may become involved in litigation relating to claims arising out of our operations in the normal course of business. The Company is not currently involved in any pending legal proceeding or litigation, and to the best of our knowledge, no governmental authority is contemplating any proceeding to which the Company is a party or to which any of the Company’s properties is subject, which would reasonably be likely to have a material adverse effect on the Company’s business, financial condition and operating results. Item 1A. Risk Factors. Investors should carefully consider the risks in the “Risk Factors” in Part 1: Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023, and our other filings with the SEC. These risks are not the only ones facing the Company. Additional risks not currently known to us or that we currently believe are immaterial may also impair our business operations. Any of these risks could adversely affect our business, cash flows, financial condition, and results of operations. The trading price of our common stock could fluctuate due to any of these risks, and investors may lose all or part of their investment. In assessing these risks, investors should also refer to the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q. There have been no material changes in our risk factors from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2022. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE Not applicable. Rule 10b5-1 Trading Arrangement During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. 31.1 31.2 32.1 101.ins Inline XBRL Instance Document 101.sch Inline XBRL Taxonomy Schema Document 101.cal Inline XBRL Taxonomy Calculation Document 101.def Inline XBRL Taxonomy Linkbase Document 101.lab Inline XBRL Taxonomy Label 101.pre Inline XBRL Taxonomy Presentation In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: November NEXTPLAT CORP By: /s/ Charles M. Fernandez Chairman and Chief Executive Officer (Principal Executive Officer) /s/ Chief Financial Officer (Principal Financial NOTE 3 – ORBITAL TRACKINGGLOBAL TELESAT COMMUNICATIONS LIMITED SHARE EXCHANGE, REVERSE ACQUISITION AND RECAPITALIZATIONSUBSIDIARIESFebruary 19, 2015,January 1, 2021, VAT rules relating to imports and exports between the UK and EU changed as a result of the UK’s departure from the EU. As of September 30, 2023 and December 31, 2022, the Company entered intorecorded a Share Exchange Agreement with Global Telesat Communications Limited, a Private Limited Company formed under the laws of England and Wales (“GTCL”) and all of the holders of the outstanding equity of GTCL (the “GTCL Shareholders”). Upon closing of the transactions contemplated under the Exchange Agreement the GTCL Shareholders (7 members) transferred all of the issued and outstanding equity of GTCL to the OTC in exchange for (i) an aggregate of 2,540,000 shares of the common stock of the OTC and 8,746,000 shares of the newly issued Series E Convertible Preferred Stock of the OTC with each share of Series E Convertible Preferred Stock convertible into ten shares of common stock, (ii) a cash payment of $375,000 and (iii) a one-year promissory notereceivable in the amount of $122,536. Such exchange caused GTCLapproximately $369,000 and $433,000, respectively, for amounts available to become a wholly owned subsidiary ofreclaim against the Company.For accounting purposes, this transaction is being accounted for as a reverse acquisitiontax liability from UK and has been treated as a recapitalization of Orbital Tracking Corp. with Global Telesat Communications Limited considered the accounting acquirer, and the financial statements of the accounting acquirer became the financial statements of the registrant. The completion of the Share Exchange resulted in a change of control. The Share Exchange was accounted for as a reverse acquisition and re-capitalization. The GTCL Shareholders obtained approximately 39% of voting control on the date of Share Exchange. GTCL was the acquirer for financial reporting purposes and the Orbital Tracking Corp. was the acquired company. The consolidated financial statements after the acquisition include the balance sheets of both companies at historical cost, the historical results of GTCL and the results of the Company from the acquisition date. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization. As part of agreement, OTC shareholders retained 5,383,172 shares of the Common Stock, 20,000 shares of series A Convertible Preferred Stock, 6,666 shares of series B Convertible Preferred Stock, 1,197,442 shares of series C Convertible Preferred Stock and 5,000,000 shares of series D Convertible Preferred Stock.8Property and equipment $ 4,973 Accounts receivable 34,585 Cash in bank 30,934 Prepaid expenses 2,219,677 Inventory 40,161 Intangible asset 250,000 Current liabilities (469,643 ) Due to related party (2,174 ) Derivative liability (4,936 ) Liabilities of discontinued operations (112,397 ) Total purchase price/assets acquired $ 1,991,180 NOTE 4 - STOCKHOLDERS’ EQUITY (DEFICIT)Preferred StockNote 11. Prepaid ExpensesAs of September 30, 2017, there were 50,000,000 shares of Preferred Stock authorized.As of September 30, 2017, there were 20,000 shares of Series A Convertible Preferred Stock authorized and 0 shares issued and outstanding, due to the conversion of 20,000 shares of Series A into 20,000 shares of common stock.As of September 30, 2017, there were 30,000 shares of Series B Convertible Preferred Stock authorized and 6,666 shares issued and outstanding.As of September 30, 2017, there were 4,000,000 shares of Series C Convertible Preferred Stock authorized and 3,540,365 shares issued and outstanding.As of September 30, 2017, there were 5,000,000 shares of Series D Convertible Preferred Stock authorized and 3,008,984 shares issued and outstanding.As of September 30, 2017, there were 8,746,000 shares of Series E Convertible Preferred Stock authorized and 7,002,877 shares issued and outstanding.As of September 30, 2017, there were 1,100,000 shares of Series F shares authorized and 1,099,998 shares issued and outstanding.As of September 30, 2017, there were 10,090,000 shares of Series G shares authorized and 10,083,351 shares issued and outstanding.As of September 30, 2017, there were 200,000 shares of Series H shares authorized and 87,500 shares issued and outstanding.As of September 30, 2017, there were 114,944 shares of Series I shares authorized and 92,944 shares issued and outstanding.As of September 30, 2017, there were 125,000 shares of Series J shares authorized and 54,669 issued and outstanding.As of September 30, 2017, there were 1,250,000 shares of Series K shares authorized and 1,166,652 issued and outstandingCommon StockAs of September 30, 2017, there were 750,000,000 shares of Common Stock authorized and 74,977,104 shares issued and outstanding.On January 3, 2017, the Company issued an aggregate of 816,810 shares of common stock upon the conversion of 35,000 shares of Series D Preferred Stock and 11,681 shares of Series E Preferred Stock.On January 4, 2017, the Company issued an aggregate of 1,000,000 shares of common stock upon the conversion of 100,000 shares of Series E Preferred Stock.On January 6, 2017, the Company issued an aggregate of 6,140 shares of common stock upon the conversion of 614 shares of Series E Preferred Stock.On January 11, 2017, the Company issued an aggregate of 1,200,000 shares of common stock upon the conversion of 60,000 shares of Series D Preferred Stock.9On January 31, 2017, the Company issued an aggregate of 2,500,000 shares of common stock upon the conversion of 125,000 shares of Series D Preferred StockOn March 2, 2017, the Company issued an aggregate of 1,000,000 shares of common stock upon the conversion of 50,000 shares of Series D Preferred Stock.On March 7, 2017, the Company issued an aggregate of 1,000,000 shares of common stock upon the conversion of 100,000 shares of Series E Preferred Stock.On April 21, 2017, the Company issued an aggregate of 1,000,000 shares of common stock upon the conversion of 100,000 shares of Series E Convertible Preferred Stock.On May 31, 2017, the Company entered separate subscription agreements with accredited investors relating to the issuance and sale of 50,000 of shares of Series J Preferred Stock at a purchase price of $10.00 per share, as well as, the issuance of 4,669 shares of Series J Preferred Stock for accounts payable of $46,694. The initial conversion price is $0.01 per share, subject to adjustment as set forth in the Series J certificate of designation. The Company is prohibited from effecting a conversion of the Series J Preferred Stock to the extent that, because of such conversion, the investor would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series J Preferred Stock. Each share of Series J Preferred Stock entitles the holder to cast one vote per share of Series J Preferred Stock owned as of the record date for the determination of shareholders entitled to vote, subject to the 4.99% beneficial ownership limitation. The Company received the necessary consents as required from prior subscription agreements, Series F Preferred Stock, Series G Preferred Stock and Preferred Series H Preferred Stock, as well as antidilution rights. The Company was required to issue 1,089,389 shares of Series K Preferred Stock, which is convertible into 108,938,900 shares of the Company’s common stock, to the certain holders for the consent and anti-dilution rights. In addition, the Company issued to a vendor as settlement of Preferred Series C Stock issued for services, 76,763 shares of Series K Preferred Stock, convertible into 7,676,300 shares of common stock, in lieu of Series C Preferred Stock. The additional issuances for the consent, anti-dilution rights and settlement, resulted in the recording of other expense and additional paid in capital of $2,308,981.On July 18, 2017, the Company issued an aggregate of 2,000,000 shares of common stock upon the conversion of 200,000 shares of Series E Convertible Preferred Stock.On September 27, 2017, the Company issued an aggregate of 2,000,000 shares of common stock upon the conversion of 200,000 shares of Series E Convertible Preferred Stock.Stock Options2014 Equity Incentive PlanOn January 21, 2014, the Board approved the adoption of a 2014 Equity Incentive Plan (the “2014 Plan”). The purpose of the 2014 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. The 2014 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and other types of stock-based awards to the Company’s employees, officers, directors and consultants. Pursuant to the terms of the 2014 Plan, either the Board or a board committee is authorized to administer the plan, including by determining which eligible participants will receive awards, the number of shares of common stock subject to the awards and the terms and conditions of such awards. Unless earlier terminated by the Board, the Plan shall terminate at the close of business on January 21, 2024. Up to 226,667 shares of common stock are issuable pursuant to awards under the 2014 Plan, as adjusted in a single adjustment for an issuance no later than sixty (60) days following the date of shareholder approval of the Plan in connection with (i) a private placement of the Company’s securities in which the Corporation receives gross proceeds of at least $1,000,000 and (ii) an acquisition of at least 50 mining leases and/or claims in the Holbrook Basin.On December 28, 2015, the Company issued Ms. Carlise, Chief Financial Officer, a ten-year option to purchase 500,000 shares of common stock as compensation for services provided to the Company. The options have an exercise price of $0.05 per share, were fully vested on the date of grant and shall expire in December 2025. The 500,000 options were valued on the grant date at approximately $1.30 per option or a total of $650,000 using a Black-Scholes option pricing model with the following assumptions: stock price of $1.30 per share (based on the closing price of the Company’s common stock of the date of issuance), volatility of 992%, expected term of 10 years, and a risk free interest rate of 1.05%. In connection with the stock option grant, the Company recorded stock based compensation for the three months ended September 30, 2017 and for the year ended December 31, 2016 of $0 and $0, respectively.10Also on December 28, 2015, the Company issued Mr. Delgado, its Director, a ten-year option to purchase 200,000 shares of common stock as compensation for services provided to the Company. The options have an exercise price of $0.05 per share, were fully vested on the date of grant and shall expire in December 2025. The 200,000 options were valued on the grant date at approximately $1.30 per option or a total of $260,000 using a Black-Scholes option pricing model with the following assumptions: stock price of $1.30 per share (based on the closing price of the Company’s common stock of the date of issuance), volatility of 992%, expected term of 10 years, and a risk free interest rate of 1.05%. In connection with the stock option grant, the Company recorded stock based compensation for the three months ended September 30, 2017 and for the year ended December 31, 2016 of $0 and $0, respectively.On December 16, 2016, the Company issued options to Mr. Phipps, to purchase up to 10,000,000 shares of common stock. The options were issued outside of the Company’s 2014 Equity Incentive Plan and are not governed by the 2014 Plan. The options have an exercise price of $0.01 per share, vest immediately, and have a term of ten years. The 10,000,000 options were valued on the grant date at approximately $0.019 per option or a total of $190,000 using a Black-Scholes option pricing model with the following assumptions: stock price of $0.019 per share (based on the closing price of the Company’s common stock of the date of issuance), volatility of 872%, expected term of 10 years, and a risk-free interest rate of 1.0500%. In connection with the stock option grant, the Company recorded stock based compensation for the year ended December 31, 2016 of $190,000, respectively.On May 26, 2017, the Company issued 5,000,000 options to Mr. Phipps, 3,750,000 options to Theresa Carlise, 1,250,000 options to Hector Delgado, its Director and 20,000,000 options to certain employees of the Company. The employees are the adult children of our Chief Executive Officer. The options were issued outside of the Company’s 2014 Equity Incentive Plan and are not governed by the 2014 Plan. The options have an exercise price of $0.01 per share, vest immediately, and have a term of ten years. The 30,000,000 options were valued on the grant date at approximately $0.02 per option or a total of $600,000 using a Black-Scholes option pricing model with the following assumptions: stock price of $0.02 per share (based on the closing price of the Company’s common stock of the date of issuance), volatility of 736%, expected term of 10 years, and a risk-free interest rate of 1.30%. In connection with the stock option grant, the Company recorded stock based compensation for the nine months ended September 30, 2017 of $600,000, respectively.A summary of the status of the Company’s outstanding stock options and changes during the nine months ended September 30, 2017 is as follows: Number of
Options Weighted
Average Exercise
Price Weighted
Average
Remaining
Contractual Life (Years) Balance at January 1, 2017 12,850,000 $ 0.02 9.10 Granted 30,000,000 0.01 9.65 Exercised — — — Forfeited — — — Cancelled — — Balance outstanding and exercisable at September 30, 2017 42,850,000 $ 0.01 9.26 Stock WarrantsA summary of the status of the Company’s outstanding stock warrants and changes during the nine months ended September 30, 2017 is as follows: Number of Warrants Weighted
Average
Exercise Price Weighted
Average
Remaining
Contractual Life (Years) Balance at January 1, 2017 5,000 $ 4.50 0.35 Granted — — — Exercised — — — Forfeited (expired May 19, 2017) 5,000 4.50 — Cancelled — — — Balance outstanding at September 30, 2017 — $ — — 11NOTE 5 – PREPAID STOCK BASED COMPENSATION$151,102approximately $866,000 and $49,000, respectively at September 30, 20172023, as compared to $46,000 and $171,164$49,000, respectively at December 31, 2016.2022. Prepaid expenses include prepayments in cash for professionalaccounting fees, and prepayments made with equity instrumentspublic company expenses, insurance, which are being amortized over the terms of their respective agreements. Amortization of the prepaid expense is included in professional fees. For the nine months ended September 30, 2017 and 2016, amortization expense was $121,096 and $173,009, respectively.agreements, as well as cost associated with certain contract liabilities. The current portion consists primarily of costs paid for future services which will occur within a year.NOTE 6 – INTANGIBLE ASSETSThe increase in prepaid expenses was attributable to the consolidation of Progressive Care as of July 1, 2023.On February 19, 2015,Property and equipment, net consisted of the Company purchased an intangible asset valued at $250,000following: $ 2,116,000 $ - 491,466 - 502,099 128,252 184,000 - 123,630 47,792 77,590 72,345 57,759 37,531 2,160,096 2,160,096 738,784 665,030 6,451,424 3,111,046 (2,404,570 ) (1,865,244 ) $ 4,046,854 $ 1,245,802 1,000,000 sharesthe nine months ended September 30, 2023 and 2022, respectively.common stock. Progressive Care as of July 1, 2023. $ 8,100,000 $ - 4,060,000 - 2,560,000 - 250,000 250,000 $ 14,970,000 $ 250,000 (853,252 ) (199,999 ) $ 14,116,748 $ 50,001 will beis included in generaldepreciation and administrative expenses. The Company began amortizingamortization in the customer contracts in January 2015. Amortization expense foraccompanying Condensed Consolidated Statements of Comprehensive Income (Loss). For the three and nine months ended September 30, 2017 2023 and 2016 was $6,250 and $6,250, respectively, and $18,7502022, the Company recognized amortization expense of approximately $0.7 million and $18,750, respectively. Future amortization of intangible assets is as follows:2017 6,250 2018 25,000 2019 25,000 2020 25,000 2021 and thereafter 100,000 Total $ 181,250 On February 19, 2015, the Company issued 1,000,000 of its common stock, par value $0.0001, at $0.05 per share, or $50,000, to a consultant as compensation for the design and delivery of dual mode gsm/Globalstar Simplex tracking devices and related hardware and intellectual property.NOTE 7 - PROPERTY AND EQUIPMENTProperty and equipment consisted of the following: September 30, 2017 December 31, 2016 Office furniture and fixtures $ 98,115 $ 90,729 Computer equipment 42,180 29,066 Appliques 2,160,096 2,160,096 Website development 114,985 100,436 Less accumulated depreciation (618,859 ) (401,989 ) Total $ 1,796,517 $ 1,978,338 Depreciation expense was $67,893 and $205,569 for the three and nine months ended September 30, 2017, respectively. For the three and nine months ended September 30, 2016 depreciation expense was $63,969 and $197,625, respectively.NOTE 8 - INVENTORIESAt September 30, 2017 and December 31, 2016, inventories consisted of the following: September 30, 2017 December 31, 2016 Finished goods $ 397,988 $ 335,267 Less reserve for obsolete inventory - - Total $ 397,988 $ 335,267 For the nine months ended September 30, 2017 and the year ended December 31, 2016, the Company did not make any change for reserve for obsolete inventory.12NOTE 9 - RELATED PARTY TRANSACTIONS Amount $ 640,748 2,563,000 2,538,000 2,538,000 2,538,000 3,299,000 $ 14,116,748 Company has received financing fromincrease in intangible assets was attributable to the Company’s Chief Executive Officer. No formal repayment terms or arrangements existed prior to February 19, 2015, when as partconsolidation of the Share Exchange Agreement, the Company entered into a note with David Phipps where the stockholder loans bear no interest and are due February 19, 2016. On February 19, 2016, the note was extended an additional year to February 19, 2017 and on January 9, 2017 the note was extended another additional year to February 19, 2018. The balance of the related party note payable was $15,004Progressive Care as of September 30, 2017. The accounts payable due to related party includes advances for inventory due to David Phipps of $52,887. Total payments due to David Phipps as of September 30, 2017 and December 31, 2016 are $67,891 and $67,453, respectively.July 1, 2023.Also, as part of the Share Exchange Agreement entered into on February 19, 2015, Mr. Phipps received a payment of $25,000 as compensation for transition services that he provided.The Company employs two individuals who are related to Mr. Phipps, of which earned gross wages totaled $50,406 for the nine months ended September 30, 2017. For the nine months ended September 30, 2016, the Company employed two individuals who were related to Mr. Phipps of which earned gross wages of $45,164.NOTE 10 - COMMITMENTS AND CONTINGENCIESEmployment AgreementsNote 14. Equity Method InvestmentFebruary 19, 2015, Orbital SatcomAugust 30, 2022, NextPlat entered into a Securities Purchase Agreement (the “SPA”) between NextPlat and Progressive Care, under which NextPlat, its Executive Chairman and Chief Executive Officer, Charles M. Fernandez, board member, Rodney Barreto, and certain other investors invested an employment agreementaggregate of $8.3 million into Progressive Care. In connection with Mr. Phipps, whereby Mr. Phipps agreedthe SPA, NextPlat purchased 3,000 newly issued Units of Progressive Care valued at $6 million, with each Unit comprised of one share of Progressive Care’s Series B Convertible Preferred Stock, $0.001 par value, and one Investor Warrant to serve aspurchase a share of Series B Convertible Preferred Stock at an exercise price of $2,000 The Investor Warrants may also be exercised, in whole or in part, by means of a cashless exercise. The Convertible Preferred Stock has a stated value of $2,000 per share and each Preferred Stock share has the Presidentequivalent voting rights of Orbital Satcom for500 common stock shares (after giving effect to the Reverse Stock Split described below). Each share of Series B Convertible Preferred Stock is convertible at any time at the option of the holder into shares of Progressive Care Common Stock shares determined by dividing the stated value by the conversion price which is $4.00 (after giving effect to the Reverse Stock Split described below). period of two years, subject to renewal, in considerationModification Agreement wherein the terms were modified for an annual salaryexisting Secured Convertible Promissory Note (the “Note”) originally held by a third party note holder and sold to the NextPlat Investors. The NextPlat Investors purchased the Note as part of $180,000. Additionally, undera Confidential Note Purchase and Release Agreement between the former note holder and the NextPlat Investors. As of the date of the SPA, the aggregate amount of principal and interest outstanding on the Note was approximately $2.8 million. As part of the Modification Agreement, various terms of the employment agreement, Mr. Phipps shall be eligibleNote were modified, among them, the Conversion Price for an annual bonus if the Company meets certain criteria, as established byNote was modified to a fixed price of $4.00 per share of common stock (after giving effect to the Reverse Stock Split described below). In addition, the Note was modified to provide for mandatory conversion upon the later to occur of (a) the completion of the Company’s reverse stock split, and (b) the listing of the Company’s common stock on a national exchange, including the Nasdaq Capital Market, the Nasdaq Global Market, or the New York Stock Exchange. Also, pursuant to the SPA, Messrs. Fernandez and Barreto were nominated for election to Progressive Care’s Board of Directors. Mr. Phipps remains the sole director of GTCL following the closing of the Share Exchange. Mr. Phipps and the Company entered into an Indemnification Agreement at the closing.The Company entered into an employment agreement with Ms. Carlise on June 9, 2015. The agreement has a termOn September 13, 2022, the Progressive Care Board of one year, and shall automatically be extended for additional terms of one year each. The agreement provides for an annual base salary of $72,000. In addition to the base salary Ms. Carlise shall be eligible to receive an annual cash bonus if the Company meets or exceeds criteria adopted by the Compensation CommitteeDirectors appointed Charles M. Fernandez as Chairman of the Board of Directors and shall be eligible for grants of awards under stock option or other equity incentive plansRodney Barreto as the Vice Chairman of the Company.Board of Directors. In connection with these appointments, Alan Jay Weisberg, Progressive Care’s current Chairman and Chief Executive Officer, was appointed to serve as a Vice Chairman. On September 12, 2022, two of Progressive Care’s Directors, Birute Norkute and Oleg Firer, resigned as Directors. On October 7, 2022, the Progressive Care Board of Directors unanimously voted to approve the appointment of Pedro Rodriguez, MD to the Board. Dr. Rodriguez was nominated to the Progressive Care Board by NextPlat.28, 2015,29, 2022, Progressive Care filed a Certificate of Amendment to Articles of Incorporation (the “Amendment to Articles”) with the Secretary of State of the State of Delaware. Pursuant to the Amendment to Articles, each 200 shares of Progressive Care’s common stock outstanding was converted into one share of common stock (the “Reverse Stock Split”) and the number of shares of common stock that Progressive Care is authorized to issue was reduced to 100 million (the “Reduction in Authorized Stock”). The Reverse Stock Split and the Reduction in Authorized Stock were approved by the Progressive Care Board of Directors and the shareholders.amended her employment agreement. Effective December 1, 2015,purchased 455,000 newly issued units of securities from Progressive Care (the “Units”) at a price per Unit of $2.20 for an aggregate purchase price of $1 million (the “Unit Purchase”). Each Unit consisted of one share of common stock, par value $0.0001 per share, of Progressive Care (“Common Stock”) and one warrant to purchase a share of Common Stock (the “PIPE Warrants”). The PIPE Warrants have a three-year term and are immediately exercisable at $2.20 per share of Common Stock. On May 9, 2023, NextPlat and Progressive Care closed the termtransactions contemplated in the SPA. Ms. Carlise’s employment was extendedthat certain Amended and Restated Secured Convertible Promissory Note, dated as of September 2, 2022, made by Progressive Care in the original face amount of approximately $2.8 million (the “Note”). Pursuant to December 1, 2016 from June 9, 2016, her annual salary was increased to $140,000 from $72,000the DCA, NextPlat and shethe other Holders agreed to devote her full businessconvert the total approximately $2.9 million of outstanding principal and accrued and unpaid interest to Common Stock at a conversion price of $2.20 per share. NextPlat received 570,599 shares issued upon conversion of the Note. In addition, NextPlat received a warrant to purchase one share of Common Stock for each share of Common Stock they received upon conversion of the Note (the “Conversion Warrants”). The Conversion Warrants have a three-year term and are immediately exercisable at $2.20 per share of Common Stock.Company. Thethree-year term of the OriginalDebenture Purchase Agreement, up to an aggregate of $10 million of secured convertible debentures from Progressive Care (the “Debentures”). Pursuant to the Amendment, NextPlat and Progressive Care agreed to amend the Debenture Purchase Agreement and the form of Debenture to have a conversion price of $2.20 per share. At present, no Debentures have been purchased by NextPlat under the Debenture Purchase Agreement.amendeddescribed in Note 4, NextPlat concluded that there was a change in control in Progressive Care. As of July 1, 2023, NextPlat has the right to control more than 50 percent of the voting interests in Progressive Care through the concurrent common stock purchase warrant exercises and voting agreement. Beginning on July 1, 2023, the Company changed the accounting method for its investment in Progressive Care, which prior to July 1, 2023 had been accounted for as an equity method investment, to consolidation under the voting interest model in FASB ASC Topic 805. Therefore, Progressive Care became a consolidated subsidiary of the Company on July 1, 2023. $ 5,260,525 1,506,000 6,138,051 (1,603,649 ) (49,548 ) 21,443 199,061 (6,944 ) (11,464,939 ) $ - $ (1,603,649 ) (49,548 ) 21,443 199,061 (6,944 ) $ (1,439,637 ) $ 12,362,513 $ 1,194,067 366,569 23,040 650,000 - - 4,325 55,748 86,462 6,480 5,685 - 23,771 - 84,685 - 88,448 265 356 239,090 7,256 $ 13,680,665 $ 1,518,095 (Unaudited) (Audited) $ 1,162,004 $ - 25,000 - 270,906 216,756 178,552 - 1,636,462 216,756 (385,303 ) (60,490 ) $ 1,251,159 $ 156,266 Amendment, shall automatically extend for additional termsland and building, bears interest at a fixed rate of one year each, unless either party gives prior written notice4.75% per annum, matures on December 14, 2028 and is subject to a prepayment penalty. Principal and interest will be repaid through 119 regular payments of non-renewal to$11,901 that began in January 2019, with the other party no later than 60 days prior to final payment of all principal and accrued interest not yet paid on December 14, 2028. Note repayment is guaranteed by Progressive Care Inc.expiration of the initial term or the then current renewal term, as applicable.uncollateralized note payable represents a non-interest-bearing loan that is due on demand from an investor.March 3, 2016, July 16, 2020 (the “Issue Date”), GTC, entered into a Coronavirus Interruption Loan Agreement (“Debenture”) by and among the Company and HSBC UK Bank PLC (the “Lender”) for an amount of £250,000, or USD $338,343 at an exchange rate of GBP: USD of 1.3533720. The Debenture bears interest beginning July 16, 2021, at a rate of 4.0% per annum over the Bank of England Base Rate (0.1% as of July 16, 2020), payable monthly on the outstanding principal amount of the Debenture. The Debenture has a term of 6 years from the date of drawdown, July 15, 2026, the “Maturity Date”. The first repayment of £4,166.67 (exclusive of interest) was made 13 month(s) after July 16, 2020. Voluntary prepayments are allowed with 5 business days’ written notice and the amount of the prepayment is equal to 10% or more of the limit or, if less, the balance of the debenture. The Debenture is secured by all GTC’s assets as well as a guarantee by the UK government. The proceeds from the Debenture were used for general corporate and working capital purposes. The Debenture includes customary events of default, including, among others: (i) non-payment of amounts due thereunder, (ii) non-compliance with covenants thereunder, (iii) bankruptcy or insolvency (each, an “Event of Default”). Upon the occurrence of an Event of Default, the Debenture becomes payable upon demand. $ 144,420 285,356 175,435 154,222 123,597 753,432 $ 1,636,462 two-year Executive Employmentsecurities purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale by the Company in a private placement of 3,428,571 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”). The offering price of the Common Stock was $1.75 per share, the closing price of the Common Stock on April 4, 2023. On April 11, 2023, the Private Placement closed. Upon the closing of the Private Placement, the Company received gross proceeds of approximately $6.0 million. The Company sold the Common Stock to the Investor in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws. The Investor represented that it is acquiring the Common Stock for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. Accordingly, the Common Stock has not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.Phipps, effective JanuaryFernandez, as Manager of Digital Assets. Mrs. Fernandez is an at-will employee with an annual salary of $95,000. On September 22, 2022, Mrs. Fernandez’s title was changed to Chief of Staff and Special Assistant to the Chairman of the Board, with no change to her salary. Previously Mrs. Fernandez was a consultant and earned compensation for her services of $10,995 for the year ended December 31, 2022. In April 2023, Mrs. Fernandez’s annual salary increased to $125,000, which was approved by the Board of Directors.2016. Under 2023, the Employment Agreement,Company, Charles M. Fernandez, and Rodney Barreto exercised common stock purchase warrants and were issued common stock shares by Progressive Care. The Company exercised common stock purchase warrants on a cashless basis and was issued 402,269 common stock shares. The Company also exercised common stock purchase warrants on a cash basis and paid consideration in the amount of $506,000 and was issued 230,000 common stock shares. Mr. Phipps will serveFernandez exercised common stock purchase warrants on a cashless basis and was issued 211,470 common stock shares. Mr. Barreto exercised common stock purchase warrants on a cashless basis and was issued 130,571 common stock shares.ExecutiveFinancial Officer was terminated for cause. Mr. Seifert asserts that the termination was not for cause and President, and receive an annual base salary equal to the sum of $144,000 and £48,000, or $61,200 at the yearly conversion rate of 1.27500. Mr. Phippsthat he is also eligible for bonusowed all compensation in an amount equal to up to fifty (50%) percent ofpayable under his then-current base salary if the Company meets or exceeds criteria adopted by the Compensation Committee, if any, or Board and equity awards as may be approved in the discretion of the Compensation Committee or Board. Also on March 3, 2016 and effective January 1, 2016, the Company’s wholly owned subsidiary Orbital Satcom Corp. and Mr. Phipps, terminated an employment agreement between them dated February 19, 2015 pursuantexecuted in June 2021. The Company’s position is that Mr. Seifert is not owed any additional consideration or compensation relating to which Mr. Phipps was employed as President of Orbital Satcom for an annual base salary of $180,000. The other terms of this agreementhis prior service with the Company are identicalor arising under any employment agreement. The Company believes it has adequate defenses to the termsany such claims. The Company has determined to initiate litigation against Mr. Seifert asserting a number of Mr. Phipps’claims including, but not limited to, rescission of the employment agreement, fraud in the inducement in connection with Orbital Satcom described above.Litigationthe execution of the employment agreement, and breach of the fiduciary duties of good faith and loyalty. The Company does not expect to seek substantial monetary relief in the litigation.13NOTE 11– DERIVATIVE LIABILITYJune 2008May 2018, Progressive Care entered into a FASB approved guidance relatedfinance lease obligation to the determination of whether a freestanding equity-linked instrument should be classified as equity or debt under the provisions of FASB ASC Topic No. 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Stock. The adoption of this requirement will affect accounting for convertible instruments and warrants with provisions that protect holders from declines in the stock price (“down-round” provisions). Warrants with such provisions are no longer recorded in equity and are reclassified as a liability.Instruments with down-round protection are not considered indexed to a company’s own stock under ASC Topic 815, because neither the occurrence of a sale of common stock by the company at market nor the issuance of another equity-linked instrumentpurchase pharmacy equipment with a lower strike price is an input tocost of approximately $115,000. The terms of the fair valuelease agreement require monthly payments of a fixed-for-fixed option on equity shares.$1,678 plus applicable tax over 84 months ending March 2025 including interest at the rate of 6%. connectionDecember 2020, Progressive Care entered into an interest-free finance lease obligation to purchase computer servers with the issuancea cost of its 6% convertible debentures and related warrants, the Company has determined that theapproximately $51,000. The terms of the convertible warrants include down-round provisions under which the exercise price could be affected by future equity offerings. Accordingly, the warrants are accounted for as liabilities at the datelease agreement require monthly payments of issuance and adjusted to fair value through earnings at each reporting date. $1,411 plus applicable tax over 36 months ending November 2023. May 17, 2016, the CompanyDecember 2, 2021, Nextplat entered into a 62-month lease for 4,141 square feet of office space in Florida ("Florida lease"), for $186,345 annually. The rent increases 3% annually. The lease commenced upon occupancy on June 13, 2022, and will expire on August 31, 2027.agreements with holdersrate of the Company’s outstanding convertible notes in the amount of $504,168 originally issued1.24 GBP: USD. The Poole lease was renewed on December 28, 2015 (the “Notes”) pursuant to which the Notes were cancelled October 6, 2022, and the exchanging holders were issuedexpired October 31, 2023 and renewed for an aggregate of 10,083,351 shares of newly designated Series G Convertible Preferred Stock. Upon the conversion of the Series G Convertible Preferred Stock, additional paid in capital increased by $649,662 from the decrease in the Notes payable of $504,168, decrease in derivative liabilities of $146,502 and increase in Series G Convertible Preferred Stock of $1,008.twelve months.Notes were accounted for as liabilities atFlorida lease does not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Variable expenses generally represent the dateCompany’s share of issuance and adjusted to fair value through earnings at each reporting date.the landlord’s operating expenses. The Company recorded amortizationdoes not have any leases classified as financing leases.discount to the Notes of $0 and $602,515 at six months ended September 30, 20172023 and December 31, 2016. As of September 30, 2017, and December 31, 2016, the Company has an unamortized discount balance of $0. The Company has recognized derivative liabilities of $0 at September 30, 2017 and December 31, 2016, respectively. The gain (loss) resulting from the decrease (increase) in fair value of this convertible instrument was $422,974 for the year ended December 31, 2016. 2022 was 3.75%. Right of use assets for operating leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. As of September 30, 2023 and December 31, 2022, we have not recognized any impairment losses for our ROU assets.recognized derivative liabilitiestwo reportable segments: (i) e-Commerce Operations, which involves acquiring and leasing, primarily an e-commerce platform to collaborate with businesses to optimize their ability to sell their goods online, domestically, and internationally, and enabling customers and partners to optimize their e-commerce presence and revenue, and other related businesses and (ii) Healthcare Operations, which provides TPA, data management, COVID-19 related diagnostics and vaccinations, prescription pharmaceuticals, compounded medications, telepharmacy services, anti-retroviral medications, medication therapy management, the supply of prescription medications to long-term care facilities, medication adherence packaging, contracted pharmacy services for related warrants of $0340B covered entities under the 340B Drug Discount Pricing Program, and $1,237 at September 30, 2017 and December 31, 2016, respectively. The gain resulting from the decrease in fair value of this convertible instrument was $1,237 and $3,119 for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. On May 19, 2017, the related warrant expired. Conversion
feature
derivative
liability Warrant
liability Total Balance at January 1, 2016 $ 614,035 $ 4,356 $ 618,391 Change in fair value included in earnings (422,974 ) (3,119 ) (426,093 ) Net effect on additional paid in capital (191,061 ) - (191,061 ) Balance at December 31, 2016 $ - $ 1,237 $ 1,237 Change in fair value included in earnings - (1,237 ) (1,237 ) Balance at September 30, 2017 $ - $ - $ - NOTE 12 - CONCENTRATIONShealth practice risk management. Customers:The Company evaluates the performance of each of the segments based on profit or loss after general and administrative expenses. While the Company believes there are synergies between the two business segments, the segments are managed separately because each requires different business strategies.
The following tables present a summary of the reportable segments: e-Commerce Operations Healthcare Operations Eliminations Total $ - $ 9,887,890 $ - $ 9,887,890 2,930,721 - - 2,930,721 - 2,471,560 - 2,471,560 $ 2,930,721 $ 12,359,450 $ - $ 15,290,171 2,126,602 8,578,887 - 10,705,489 1,978,743 2,268,708 (60,022 ) 4,187,429 563,915 1,919,517 - 2,483,432 277,872 242,854 - 520,726 163,512 707,554 - 871,066 5,110,644 13,717,520 (60,022 ) 18,768,142 $ (2,179,923 ) $ (1,358,070 ) $ 60,022 $ (3,477,971 ) e-Commerce Operations Healthcare Operations Eliminations Total $ - $ 9,887,890 $ - $ 9,887,890 8,764,237 - - 8,764,237 - 2,471,560 - 2,471,560 $ 8,764,237 $ 12,359,450 $ - $ 21,123,687 6,495,432 8,578,887 - 15,074,319 5,286,915 2,268,708 (60,022 ) 7,495,601 2,119,790 1,919,517 - 4,039,307 1,142,620 242,854 - 1,385,474 493,271 707,554 - 1,200,825 15,538,028 13,717,520 (60,022 ) 29,195,526 $ (6,773,791 ) $ (1,358,070 ) $ 60,022 $ (8,071,839 ) $ 36,395,131 $ 41,264,995 $ (11,464,939 ) $ 66,195,187 during the three months ended September 30, 2017 and 2016.for either period.2017 2023 and 2016.2022 (unaudited). September 30, 2017 September 30, 2016 $ 186,000 9.7 $ 109,000 6.7 $ 444,000 23.2 $ 281,000 17.1 $ 188,000 9.9 $ 252,000 15.4 $ 226,000 11.8 $ 131,000 8.0 Cygnus Telecom $ 357,846 9.7 % $ 383,922 13.6 % $ 113,000 5.9 $ 181,000 11.0 Delorme $ 204,253 5.5 % $ 299,113 10.6 % Globalstar Europe $ 489,026 13.3 % $ 412,621 14.6 % Network Innovations $ 1,468,253 39.8 % $ 1,139,080 40.4 % NOTE 13 - SUBSEQUENT EVENTSThe following table sets forth information as to each supplier that accounted for 10% or more of the Company’s purchases for the nine months ended September 30, 2023 and 2022 (unaudited). $ 798,000 12.0 $ - - $ 706,000 10.6 $ 396,000 6.5 $ 1,494,000 22.5 $ 1,169,000 19.2 $ 809,000 12.2 $ 719,000 11.8 $ 476,000 7.2 $ 1,213,000 19.9 On November 3, 2017, we held a special meeting of our shareholders in Miami, Florida. At the special meeting, our shareholders voted to approve a reverse split of our common stock at a ratio of not less than 1 for 300 and not more than 1 for 800, within the discretion of the Board of Directors, at any time prior to December 31, 2017. 61,517,335 votes, or 61.78% of the shareholder voting power, voted to approve the proposal. 16,123,364 votes were cast against the proposal, with 482,540 votes abstaining.datefollowing table sets forth revenue as to each geographic location, for the three months ended September 30, 2023 and 2022 (unaudited): $ 1,714,983 58.5 $ 1,954,967 74.3 737,189 25.2 442,678 16.8 431,612 14.7 10,273 0.4 23,943 0.8 195,307 7.4 22,994 0.8 27,601 1.1 $ 2,930,721 100.0 $ 2,630,826 100.0 $ 5,381,938 61.4 $ 7,019,811 77.3 2,194,309 25.0 1,342,636 14.8 1,025,566 11.7 32,578 0.4 120,836 1.4 592,847 6.5 41,588 0.5 92,211 1.0 $ 8,764,237 100.0 $ 9,080,083 100.0 reverse split,three months ended September 30, 2023. 35 % 31 % 16 % well asOPKO's exclusive distributor in China with respect to the specific split ratio, will be announced when determinedProducts. The Distribution Agreement has a term of one year and approved by our Boardautomatically renews for additional one-year terms unless either party provides ninety days prior written notice of Directors.non-renewal.14condensed consolidated financial statementsCondensed Consolidated Financial Statements and the notes thereto contained elsewhere in this report. Statements made in this Item 2, “Management’s Discussion and Analysis or Plan of Operation,Financial Condition and Results of Operations,” and elsewhere in this quarterly report on Form 10-Q that do not consist of historical facts, are “forward-looking statements.” Statements accompanied or qualified by, or containing words such as “may,” “will,” “should,” “believes,” “expects,” “intends,” “plans,” “projects,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume,” and “assume” constitute forward-looking statements, and as such, are not a guarantee of future performance. The statements involve factors, risks and uncertainties, the impact or occurrence of which can cause actual results to differ materially from the expected results described in such statements. Risks and uncertainties can include, among others, fluctuations in general business cycles and changing economic conditions; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology that can reduce the demand for the Company’s products, as well as other factors, many or all of which may be beyond the Company’s control. Consequently, investors should not place undue reliance upon forward-looking statements as predictive of future results. The Company disclaims any obligation to update the forward-looking statements in this report.read the following information in conjunction with our financial statements and related notes contained elsewhere in this report. You should consider the risks and difficulties frequently encountered by early-stage companies, particularly those engaged in new and rapidly evolving markets and technologies. Our limited operating history provides only a limited historical basis to assess the impact that critical accounting policies may have on our business and our financial performance.EdgarEDGAR database, including the annual reportour Annual Report on Form 10-K filed for the year ended December 31, 2016,2022, filed with the SEC on April 7, 2017.March 31, 2023, and our subsequent public filings with the SEC. We encourage you to review Progressive Care Inc. periodic reports filed with the SEC and included in the SEC’s EDGAR database, including our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023, and their subsequent public filings with the SEC.Corporate InformationOverviewJanuary 22, 2015,August 30, 2022, NextPlat entered into a Securities Purchase Agreement (the “SPA”) between NextPlat and Progressive Care, under which NextPlat, its Executive Chairman and Chief Executive Officer, Charles M. Fernandez, board member, Rodney Barreto, and certain other investors invested an aggregate of $8.3 million into Progressive Care. In connection with the Company changed its nameSPA, NextPlat purchased 3,000 newly issued Units of Progressive Care valued at $6 million, with each Unit comprised of one share of Progressive Care’s Series B Convertible Preferred Stock, $0.001 par value, and one Investor Warrant to “Orbital Tracking Corp.” from “Great West Resources, Inc.”purchase a share of Series B Convertible Preferred Stock at an exercise price of $2,000 The Investor Warrants may also be exercised, in whole or in part, by means of a cashless exercise. The Convertible Preferred Stock has a stated value of $2,000 per share and each Preferred Stock share has the equivalent voting rights of 500 common stock shares (after giving effect to the Reverse Stock Split described below). Each share of Series B Convertible Preferred Stock is convertible at any time at the option of the holder into shares of Progressive Care Common Stock shares determined by dividing the stated value by the conversion price which is $4.00 (after giving effect to the Reverse Stock Split described below). a merger with a newly-formed wholly owned subsidiary.the SPA, Messrs. Fernandez and Barreto were nominated for election to Progressive Care’s Board of Directors. March 28, 2014,September 13, 2022, the Company merged with a newly-formed wholly-owned subsidiaryProgressive Care Board of Directors appointed Charles M. Fernandez as Chairman of the Company solely forBoard of Directors and Rodney Barreto as the purposeVice Chairman of changing its statethe Board of incorporation to Nevada from Delaware, effecting a 1:150 reverse split of its common stock, and changing its name to Great West Resources, Inc. inDirectors. In connection with these appointments, Alan Jay Weisberg, Progressive Care’s current Chairman and Chief Executive Officer, was appointed to serve as a Vice Chairman. On September 12, 2022, two of Progressive Care’s Directors, Birute Norkute and Oleg Firer, resigned as Directors. On October 7, 2022, the plansProgressive Care Board of Directors unanimously voted to enter intoapprove the businessappointment of potash mining and exploration. During late 2014Pedro Rodriguez, MD to the Company abandoned its effortsBoard. Dr. Rodriguez was nominated to enter the potash business.Progressive Care Board by NextPlat.The Company was originally incorporated in 1997 On November 11, 2022, Mr. Weisberg resigned from his positions as a Florida corporation. On April 21, 2010, the Company merged withProgressive Care’s Chief Executive Officer and into a newly-formed wholly-owned subsidiary for the purpose of changing its state of incorporation to Delaware, effecting a 2:1 forward split of its common stock, and changing its name to EClips Media Technologies, Inc. On April 25, 2011, the Company changed its name to “Silver Horn Mining Ltd.” pursuant to a merger with a newly-formed wholly-owned subsidiary.Global Telesat Communications Limited (“GTCL”) was formed under the laws of England and Wales in 2008. On February 19, 2015, the Company entered into a share exchange agreement with GTCL and allco-Vice-Chairman of the holdersBoard of Directors. On the outstanding equity of GTCL pursuantsame date, the Board appointed Mr. Fernandez to which GTCL became a wholly owned subsidiary ofserve as the Company.For accounting purposes, this transaction is being accounted for as a reverse acquisition and has been treated as a recapitalization of Orbital Tracking Corp. with Global Telesat Communications Limited considered the accounting acquirer, and the financial statements of the accounting acquirer became the financial statements of the registrant. The completion of the Share Exchange resulted in a change of control. The Share Exchange was accounted for as a reverse acquisition and re-capitalization. The GTCL Shareholders obtained approximately 39% of voting control on the date of Share Exchange. GTCL was the acquirer for financial reporting purposes and the Orbital Tracking Corp. was the acquired company. The consolidated financial statements after the acquisition include the balance sheets of both companies at historical cost, the historical results of GTCL and the results of the Company from the acquisition date. All share and per share information in the accompanying consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization.15The Company is a distributor, developer and reseller of satellite enabled communications hardware and provides products, airtime and related services to customers located both in the United States and internationally through its subsidiaries, US based Orbital Satcom Corp. (“Orbital Satcom”) and UK based Global Telesat Communications Limited (“GTCL”). We sell equipment and airtime for use on all major satellite networks including Globalstar, Inmarsat, Iridium and Thuraya. We specialize in offering a range of satellite enabled personal and asset tracking products and provide an advanced mapping portal for customers using our range of GSM and satellite based GPS tracking devices. Additionally, we operate a short-term rental service for customers who require use of our equipment for a limited time without the up-front expense of purchasing hardware.Our acquisition of GTCL in February 2015 expanded our global satellite based infrastructure and business, which was first launched in December 2014 through the purchase of certain contracts which entitle us to transmit GPS tracking coordinates and other information at preferential rates through one of the world’s largest commercial satellite networks.We now have a physical presence in the UK and Miami, as well as our online storefront presence in more than 10 countries, and have in excess of 20,000 customers located in almost 80 countries across every continent in the world. Our customers include businesses, U.S. and foreign governments, non-governmental and charitable organizations, military users and private individuals located all over the world.Recent TransactionsAcquisition of Global Telesat and Related Transactionsnew Chief Executive Officer immediately. February 19, 2015, the CompanyDecember 29, 2022, Progressive Care filed a Certificate of Amendment to Articles of Incorporation (the “Amendment to Articles”) with the Secretary of State of the State of Nevada a Certificate of Designation for the Series E Convertible Preferred Stock, setting forth the rights, powers, and preferences of the Series E Convertible Preferred Stock.Delaware. Pursuant to the Series E Certificate of Designation, the Company designated 8,746,000Amendment to Articles, each 200 shares of its blank check preferredProgressive Care’s common stock as Series E Convertible Preferred Stock. Eachoutstanding was converted into one share of Series E Convertible Preferred Stock has a stated value equal to its par value of $0.0001 per share. In the event of a liquidation, dissolution or winding up of the Company, the holder of the Series E Convertible Preferred Stock would have preferential payment and distribution rights over any other class or series of capital stock that provide for Series E Convertible Preferred Stock’s preferential payment and over our common stock. The Series E Convertible Preferred is convertible into ten (10) shares of the Company’s common stock. The Company is prohibited from effecting the conversion of the Series E Convertible Preferred Stock to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99%, in the aggregate, of the issued and outstanding shares of common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series E Convertible Preferred Stock. Each share of Series E Convertible Preferred(the “Reverse Stock entitles the holder to vote on all matters voted on by holders of common stock as a single class. With respect to any such vote, each share of Series E Convertible Preferred Stock entitles the holder to cast ten (10) votes per share of Series E Convertible Preferred Stock owned at the time of such vote, subject to the 4.99% beneficial ownership limitation.On February 19, 2015, the Company entered into a share exchange agreement with Global Telesat Communications Limited, a Private Limited Company formed under the laws of England and Wales (“GTCL”Split”) and all of the holders of the outstanding equity of GTCL (the “GTCL Shareholders”). Upon closing of the transactions contemplated under the share exchange agreement, the GTCL Shareholders transferred all of the issued and outstanding equity of GTCL to the Company in exchange for (i) an aggregate of 2,540,000 shares of the common stock of the Company and 8,746,000 shares of the newly issued Series E Convertible Preferred Stock of the Company (the “Series E Preferred Stock”) with each share of Series E Preferred Stock convertible into ten shares of common stock, (ii) a cash payment of $375,000 and (iii) a one-year promissory note in the amount of $122,536. Such exchange caused GTCL to become a wholly owned subsidiary of the Company.Also on February 19, 2015, David Phipps, the founder, principal owner and sole director of GTCL and the former founder and president of GTC, was appointed President of Orbital Satcom. Following the transaction, Mr. Phipps was appointed Chief Executive Officer and Chairman of the Board of Directors of the Company. The acquisition of GTCL expands the Company’s global satellite based business and enables the Company to operate as a vertically integrated satellite services business with experienced management operating from additional locations in Poole, England in the United Kingdom and Aventura, Florida.On February 19, 2015, the Company issued to Mr. Rector, the former Chief Executive Officer, Chief Financial Officer and director of the Company, 850,000 shares of common stock and a seven year immediately vested option to purchase 2,150,000 shares of common stock at a purchase price of $0.05 per share as compensation for services provided to the Company.On February 19, 2015, the Company sold an aggregate of 550,000 units at a per unit purchase price of $2.00, in a private placement to certain accredited investors for gross proceeds of $1,100,000. Each unit consists of: forty (40) shares of the Company’s common stock or, at the election of any purchaser who would, as a result of purchase of units become a beneficial owner of five (5%) percent or greater of the outstanding common stock of the Company, four (4) shares of the Company’s Series C Convertible Preferred Stock, par value $0.0001 per share, with each share convertible into ten (10) shares of common stock. The Company sold 15,000 units consisting of an aggregate of 600,000 shares of common stock and 535,000 units consisting of an aggregate of 2,140,000 shares of Series C Convertible Preferred Stock.16On February 19, 2015, the Company issued an aggregate of 1,675,000 shares of common stock to certain current consultants, former consultants and employees. These shares consist of (i) 250,000 shares of common stock issued to a consultant as compensation for services relating to the provision of satellite tracking hardware and related services, sales and lead generation, valued at $12,500 (ii) 1 million shares of common stock issued to a consultant as compensation for the design and delivery of dual mode gsm/Globalstar Simplex tracking devices and related hardware and intellectual property, valued at $50,000 (iii) 250,000 shares of common stock, subject to a one year lock up, issued to the Company’s controller, valued at $12,500 and (iv) 175,000 shares of common stock issued to MJI in full satisfaction of outstanding debts of $175,000. MJI agreed to sell only up to 5,000 shares per day and the Company has a nine month option to repurchase these shares at a purchase price of $0.75 per share.GlobalStar License AcquisitionOn October 13, 2015, the Company through its wholly owned subsidiary, Orbital Satcom Corp, purchased from World Surveillance Group, Inc., and its wholly owned subsidiary, Global Telesat Corp the “Globalstar” license and equipment, which it had previously leased. On December 10, 2014, the Company, entered into a License Agreement with World Surveillance Group, Inc., and its wholly owned subsidiary, Global Telesat Corp, by which the Company had an irrevocable non-exclusive license to use certain equipment, consisting of Appliques for a term of ten years. Appliques are demodulator and RF interfaces located at various ground stations for gateways. The Company issued 2,222,222 common shares, valued at $1 per share based on the quoted trading price on date of issuance, or $2,222,222. The company reflected the license as an asset on its balance sheet with a ten-year amortization, the term of the license. On October 13, 2015, the Company acquired the license for additional consideration of $125,000 in cash. The Company valued the asset at $2,160,016, which is the unamortized balance of the Appliques License, $2,043,010 plus the consideration of $125,000.December 2015 FinancingsOn December 21, 2015, the Company entered into a Placement Agent Agreement with Chardan Capital Markets LLC, as Agent, pursuant to which the Placement Agent agreed to serve as the non-exclusive placement agent for the Company in connection with any private placement from December 21, 2015 through January 15, 2017. The Company agreed to pay the Placement Agent a cash fee of $50,000 and issue the Placement agent 250,000 shares of common stock following the issuance of at least $900,000 of securities prior to the expiration of the term of the Placement Agent Agreement. On December 28, 2015, upon closing of the note purchase and Series F subscription agreements, the Company paid the respective fees and issued the common shares.On December 28, 2015, the Company filed with the Secretary of State of the State of Nevada a Certificate of Designation for the Series F Convertible Preferred Stock, setting forth the rights, powers, and preferences of the Series F Convertible Preferred Stock. Pursuant to the Series F Certificate of Designation, the Company designated 1,100,000 shares of its blank check preferred stock as Series F Convertible Preferred Stock. Each share of Series F Convertible Preferred Stock has a stated value equal to its par value of $0.0001 per share. In the event of a liquidation, dissolution or winding up of the Company, the holder of the Series F Convertible Preferred Stock would have preferential payment and distribution rights over any other class or series of capital stock that provide for Series F Convertible Preferred Stock’s preferential payment and over our common stock. The Series F Convertible Preferred is convertible into one (1) share of the Company’s common stock. The Company is prohibited from effecting the conversion of the Series F Convertible Preferred Stock to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99%, in the aggregate, of the issued and outstanding shares of common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series F Convertible Preferred Stock. Each share of Series F Convertible Preferred Stock entitles the holder to vote on all matters voted on by holders of common stock as a single class. With respect to any such vote, each share of Series F Convertible Preferred Stock entitles the holder to cast one (1) vote per share of Series F Convertible Preferred Stock owned at the time of such vote, subject to the 4.99% beneficial ownership limitation.On December 28, 2015, the Company entered into separate subscription agreements with accredited investors relating to the issuance and sale of $550,000 of shares of Series F convertible preferred stock at a purchase price of $0.50 per share. The Preferred F Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Preferred F Share divided by the conversion price. The stated value of each Preferred F Share is $0.50 and the initial conversion price is $0.50 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. Subject to certain specified exceptions, in the event the Company issues securities at a per share price less than the conversion price for a period of two years from the closing, each holder will be entitled to receive from the Company additional shares of common stock such that the holder shall hold that number of conversion shares, in total, had such holder purchased the Preferred F Shares with a conversion price equal to the lower price issuance.On December 28, 2015, the Company entered into separate note purchase agreements with accredited investors relating to the issuance and sale of an aggregate of $605,000 in principal amount of original issue discount convertible notes for an aggregate purchase price of $550,000.17The Notes mature on December 28, 2017. The Company must repay 1/24th of the principal of the Notes each month commencing January 18, 2016. The Notes do not bear interest except that all overdue and unpaid principal bears interest at a rate equal to the lesser of 18% per year or the maximum rate permitted by applicable law. The Notes are convertible into common stock at the option of the holder at a conversion price of $1.00, subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events; provided however, that the principal and interest, if any, on the Notes may not be converted to the extent that, as a result of such conversion, the holder would beneficially own more than 4.99% of the number of shares of common stock outstandingthat Progressive Care is authorized to issue was reduced to 100 million (the “Reduction in Authorized Stock”). The Reverse Stock Split and the Reduction in Authorized Stock were approved by the Progressive Care Board of Directors and the shareholders.after giving effectexercisable. Each PIPE Warrant is exercisable at $2.20 per share of common stock. On May 9, 2023, the Companies closed the transactions contemplated in the SPA. Progressive Care received cash proceeds of $880,000, net of placement agent commission of $70,000 and legal fees of $50,000.issuanceDCA, NextPlat and the other Holders agreed to convert the total approximately $2.9 million of outstanding principal and accrued and unpaid interest to Common Stock at a conversion price of $2.20 per share (the “Debt Conversion”). Of the total 1,312,379 shares of common stockCommon Stock issued upon conversion of the Notes. Subject to certain specified exceptions, in the event the Company issues securities at a per share price less than the conversion price for a period of one year from the closing, each holder will be entitled to receive from the Company additional shares of common stock such that the holder shall hold that number of conversion shares, in total, had such holder purchased the Notes with a conversion price equal to the lower price issuance.Pursuant to the Subscription Agreement and Note Purchase Agreement, the Company agreed to use its reasonable best efforts to effectuate the increase of its authorized shares of common stock from 200,000,000 shares of common stock to 750,000,000 shares of common stock on or prior to January 31, 2016. The Company’s shareholders on March 5, 2016, approved the increase in authorized common and preferred shares. $350,000 of the proceeds from the sale of Preferred F Shares and the Notes are intended to be utilized for public relations and expenses associated with publications, reports and communications with shareholders and others concerning the company’s business. The Subscription Agreement provides the purchasers of the Preferred F Shares with a 100% right of participation in all future securities offerings of the Company, subject to customary exceptions.On May 17, 2016, the Company entered into exchange agreements with holders of the Company’s outstanding $504,168 convertible notes originally issued on December 28, 2015, pursuant to which the Notes were cancelled and the exchanging holders were issued an aggregate of 10,083,351 shares of newly designated Series G Preferred Stock.The terms of the shares of Series G Preferred Stock are set forth in the Certificate of Designation of Series G Preferred Stock as filed with the Secretary of State of the State of Nevada. The Series G COD authorizes 10,090,000 Preferred G Shares. The Preferred G Shares are convertible into shares of common stock based on a conversion calculation equal to the stated value of such Preferred G Share divided by the conversion price. The stated value of each Preferred G Share is $0.05 and the initial conversion price is $0.05 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. The Company is prohibited from effecting a conversion of the Preferred G Shares to the extent that, as a result of such conversion, such investor would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of the Preferred G Shares. Each Preferred G Share entitles the holder to vote on all matters voted on by holders of common stock as a single class. with respect to any such vote, each Preferred G Share entitles the holder to cast one vote per share of Series G Preferred Stock owned at the time of such vote subject to the 4.99% beneficial ownership limitation. Subject to certain specified exceptions, in the event the Company issues securities at a per share price less than the conversion price prior to December 28, 2016, each holder will be entitled to receive from the Company additional shares of common stock such that the holder shall hold that number of conversion shares, in total, had such holder purchased the Preferred G Shares with a conversion price equal to the lower price issuance.The exchanging holders, GRQ Consultants Inc. 401K, Michael Brauser and Intracoastal Capital LLC, are each holders of over 5% of a class of the Company’s voting securities.Key Compensation ArrangementsOn December 28, 2015, the Company and Theresa Carlise, its Chief Financial Officer, amended her employment agreement, dated June 9, 2015. Pursuant to the Amendment, which is effective December 1, 2015, the term of Ms. Carlise’s employment was extended to December 1, 2016 from June 9, 2016, her annual salary was increased to $140,000 from $72,000 and she agreed to devote her full business time to the Company. The term of the Original Agreement, as amended by the Amendment, shall automatically extend for additional terms of one year each, unless either party gives prior written notice of non-renewal to the other party no later than 60 days prior to the expiration of the initial term or the then current renewal term, as applicable.Also on December 28, 2015, the Company issued Ms. Carlise options to purchase up to 500,000 shares of common stock and issued Hector Delgado, a director of the Company, options to purchase up to 200,000 shares of common stock. The options were issued outside of the Company’s 2014 Equity Incentive Plan and are not governed by the Plan. The options have an exercise price of $0.05 per share, vest immediately, and have a term of ten years.On January 15, 2016, the Company engaged IRTH Communications LLC., for a term of 12 months to provide investor relations, public relations, internet development, communication and consulting services. As consideration for its services, IRTH will receive from the Corporation a monthly fee of $7,500 and as a single one-time retainer payment, $100,000 worth of shares of the Company’s common stock; calculated by the average closing price of the Company’s common stock on its principal exchange for the 10 (ten) trading days immediately prior to the execution of this Agreement; which shares shall be Restricted Securities, pursuant to the provisions of Rule 144. As additional compensation, inDCA, NextPlat received 570,599 shares, Charles M. Fernandez, the event the Company, during or within two (2) years after the term of this Agreement, receives investment monies (debt, equity or a combination thereof) from investor(s) introduced to the Company by IRTH as described herein, Company agrees to pay IRTH a finder’s fee equal to three percent (3%) of all gross monies invested by investor(s) and received by Company.18On February 11, 2016, the Company issued 136,612 shares of its common stock, valued at $0.60 per share, or $81,967, to IRTH Communications LLC for services, as disclosed above.On March 3, 2016, the Company entered into an Executive Employment Agreement with David Phipps, itsCompany’s Chairman President and Chief Executive Officer, effective January 1, 2016. Under the Employment Agreement, Mr. Phipps will serve asreceived 228,240 shares, and Rodney Barreto, the Company’s Chief Executive Officer and President, and receive an annual base salary equal to the sum of $144,000 and £48,000. Mr. Phipps is also eligible for bonus compensation in an amount equal to up to fifty (50%) percent of his then-current base salary if the Company meets or exceeds criteria adopted by the Compensation Committee, if any, or Board and equity awards as may be approved in the discretion of the Compensation Committee or Board. Also on March 3, 2016 and effective January 1, 2016, the Corporation’s wholly owned subsidiary Orbital Satcom Corp. and Mr. Phipps terminated an employment agreement between them dated February 19, 2015 pursuant to which Mr. Phipps was employed as President of Orbital Satcom for an annual base salary of $180,000. The other terms of the Original Agreement are identical to the terms of the Employment Agreement. Mr. Phipps remains the President of Orbital Satcom.On May 26, 2017, the Company issued 5,000,000 options to Mr. Phipps, 3,750,000 options to Theresa Carlise, 1,250,000 options to Hector Delgado, its Director and 20,000,000 options to certain employees of the Company. The employees are the adult children of our Chief Executive Officer. All of the options are fully vested and have an exercise price of $0.01 per share and a term of 10 years.Series H Preferred Stock FinancingOn October 26, 2016, the Company entered separate subscription agreements with accredited investors relating to the issuance and sale of $350,000, out of a maximum of $800,000, of shares of Series H Preferred Stock at a purchase price of $4.00 per share. The initial conversion price is $0.04 per share, subject to adjustment as set forth in the Series H COD. The Company is prohibited from effecting a conversion of the Series H Preferred Stock to the extent that, because of such conversion, the investor would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series H Preferred Stock. Each Series H Preferred Stock entitles the holder to cast one vote per share of Series H Preferred Stock owned as of the record date for the determination of shareholders entitled to vote, subject to the 4.99% beneficial ownership limitation. The Company received the necessary consents as required from prior subscription agreements, Preferred Series C, Preferred Series G and Preferred Series H, as well as antidilution rights. Certain shareholders have waived their right to adjustment, equal treatment, most favored nations and other rights to which they were entitled pursuant to the Prior Offerings, including without limitation, certain rights granted to holders of our Series C Preferred Stock, Series F Preferred Stock and G Preferred Stock. The Company was required to issue 550,000 shares of its Preferred Series C, which is convertible into 5,500,000 shares of the Company’s common stock and 114,944 shares of Preferred Series I, which is convertible into 11,494,400 shares of the Company’s common stock. Preferred Series I was issued to certain holders in lieu of Preferred Series G and Preferred Series H.Series J Preferred Stock FinancingOn May 31, 2017, the Company entered into separate subscription agreements with accredited investors relating to the issuance of shares of Series J Preferred Stock at a purchase price of $10.00 per share for sale of $500,000 proceeds and settlement of $46,694 accounts payable. The Series J Preferred Stock are convertible into shares of common stock based on a conversion calculation equal to (i) multiplying the number of shares to be converted by the stated value thereof, and then (ii) dividing the result by the conversion price in effect immediately prior to such conversion. The stated value of each Series J Preferred Stock is $10.00 and the initial conversion price is $0.01 per share, subject to adjustment as set forth in the Series J COD. The Company is prohibited from effecting a conversion of the Series J Preferred Stock to the extent that, as a result of such conversion, the investor would beneficially own more than 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock upon conversion of the Series J Preferred Stock. Each Series J Preferred Stock entitles the holder to cast one vote per share of Series J Preferred Stock owned as of the record date for the determination of shareholders entitled to vote, subject to the 4.99% beneficial ownership limitation.In connection with the Series J Offering, the Company obtained the consent of certain shareholders, as required under the agreements entered into by the Company and issued shares pursuant to applicable anti-dilution obligations. The Company is required to issue to certain prior investors of Series G Preferred Stock additional shares of Series G Preferred Stock, which would be convertible into an aggregate of 38,805,668 shares of the Company’s common stock. However, in lieu of issuing such additional shares of Series G Preferred Stock, the Company will create a new series of preferred stock, to be designated as “Series K Preferred Stock” and will issue to such holders of Series G Preferred Stock an aggregate of 388,057 shares of Series K Preferred Stock, each of which shall be convertible into 100 shares of the Company’s common stock. In addition, in order to proceed with the Series J Offering, the Company agreed to issue additional shares of Series F Preferred Stock and Series H Preferred Stock to certain prior investors. However, in lieu of issuing such additional shares of Series F Preferred Stock and Series H Preferred Stock, the Company issued to such holders of Series F Preferred Stock and Series H Preferred Stock an aggregate of 701,832 shares of Series K Preferred Stock, each of which are convertible into 100 shares of the Company’s common stock, or 70,183,243 shares. In addition, certain creditors of the Company were also entitled to anti-dilution protection from issuances and as a result such creditors were, at the closing of the Series J Offering, issued an aggregate of 76,762 shares of Series K Preferred Stock convertible into 7,676,241 shares of common stock in full satisfaction of payments owed to them.19The following table describes the capital raised for the periods as described above: Date Units Stated Value Total Proceeds Common Equivalents Anti-Dilution Issuances Total Common Equivalents Preferred Series C 2/19/2015 550,000 $ 2.00 $ 1,100,000 22,000,000 5,500,000 27,500,000 Preferred Series F 12/28/2015 1,099,998 $ 0.50 $ 550,000 1,099,998 53,899,902 54,999,900 Preferred Series G 5/17/2016 10,083,351 $ 0.05 $ 504,168 10,083,351 40,333,449 50,416,800 Preferred Series H 10/31/2016 87,500 $ 4.00 $ 350,000 8,750,000 26,250,000 35,000,000 Preferred Series J 5/31/2017 50,000 $ 10.00 $ 500,000 5,000,000 - 5,000,000 $ 3,004,168 46,933,349 125,983,351 172,916,700 Reverse Stock SplitOn November 3, 2017, we held a special meeting of our shareholders in Miami, Florida. At the special meeting, our shareholders voted to approve a reverse split of our common stock at a ratio of not less than 1 for 300 and not more than 1 for 800, within the discretionVice-Chairman of the Board of Directors, at any time prior to December 31, 2017. 61,517,335 votes, or 61.78%received 228,240 shares. In addition, each of the shareholder voting power, votedHolders also received a warrant to purchase one share of Common Stock for each share of Common Stock they received upon conversion of the Note (the “Conversion Warrants”). The Conversion Warrants have a three-year term and are immediately exercisable. Each Conversion Warrant is exercisable at $2.20 per share of Common Stock. In addition, the Company issued 330,000 warrants to certain existing Progressive Care investors to induce them to approve the proposal. 16,123,364transaction contemplated by the SPA (the “Inducement Warrants”). Charles M. Fernandez and Rodney Barreto received Inducement Warrants to purchase 190,000 and 30,000 shares of Common Stock, respectively. The Inducement Warrants have a three-year term and are immediately exercisable. Each Inducement Warrant is exercisable at $2.20 per share of Common Stock.were cast againstits common stock and equivalents. The voting agreement is irrevocable and perpetual in term.proposal,common stock purchase warrant exercises and the entry into the voting agreement, NextPlat concluded that there was a change in control in Progressive Care. As of July 1, 2023, NextPlat has the right to control more than 50 percent of the voting interests in Progressive Care through the concurrent common stock purchase warrant exercises and voting agreement noted above. Beginning on July 1, 2023, the Company changed the accounting method for its investment in Progressive Care, which prior to July 1, 2023 had been accounted for as an equity method investment to consolidation under the voting interest model in FASB ASC Topic 805. Therefore, Progressive Care became a consolidated subsidiary of the Company on July 1, 2023.482,540 votes abstaining.businesses to optimize their ability to sell their goods online, domestically, and internationally, and enabling customers and partners to optimize their e-commerce presence and revenue, which we expect will become the focus of the Company’s business in the future. Historically, the business of NextPlat has been the provision of a comprehensive array of Satellite Industry communication services, and related equipment sales. The Company operates two main e-commerce websites as well as 25 third-party e-commerce storefronts such as Alibaba, Amazon and Walmart. These e-Commerce venues form an effective global network serving thousands of consumers, enterprises, and governments. NextPlat has announced its intention to broaden its e-commerce platform and is implementing comprehensive systems upgrades to support this initiative. datesignificant accounting policies of the reverse split,Company were described in Note 1. to the Audited Consolidated Financial Statements included in the Company’s Form 10-K for the fiscal year ended December 31, 2022. Beginning on July 1, 2023, the Company changed the accounting method for its investment in Progressive Care from the equity method to the consolidation method. This change is the result of certain common stock warrant exercises by the Company and Messrs. Fernandez and Barreto and the Company's entry into the voting agreement with Messrs. Fernandez and Barreto, which cumulatively resulted in the Company having control over approximately 53% of the issued and outstanding voting stock of Progressive Care. Progressive Care became a consolidated subsidiary of the Company on July 1, 2023 and as well asa result the specific split ratio, will be announced when determined and approved by our BoardCompany has incorporated certain significant accounting policies of Directors.Progressive Care for the three months ended September 30, 2023.Three and Nine Months Ended September 30, 2017 compared to the Three and Nine Months Ended September 30, 2016Revenue.Sales for the three and nine months ended September 30, 2017 consisted primarily of sales of satellite phones, accessories and airtime plans. 2023 compared to the three months ended September 30, 2022 : $ 15,290,171 $ 2,630,826 $ 12,659,345 481 % 10,705,489 1,952,072 8,753,417 448 % 4,584,682 678,754 3,905,928 575 % 8,062,653 2,843,693 5,218,960 184 % (3,477,971 ) (2,164,939 ) (1,313,032 ) 61 % 655 93,901 (93,246 ) (99 )% (3,478,626 ) (2,258,840 ) (1,219,786 ) 54 % (23,011 ) - (23,011 ) - % (3,501,637 ) (2,258,840 ) (1,242,797 ) 55 % 6,138,051 - 6,138,051 - % - (3,454,436 ) 3,454,436 (100 )% 2,636,414 (5,713,276 ) 8,349,690 (146 )% 811,239 - 811,239 - % $ 3,447,653 $ (5,713,276 ) $ 9,160,929 (160 )% 2017,2023 and 2022, we recognized overall revenue from operations of approximately $15.3 million and $2.6 million, respectively, an overall increase of approximately $12.7 million for the three months ended September 30, 2023, when compared to the three months ended September 30, 2022. The increase in revenue was primarily attributable to an increase in e-Commerce revenue of approximately $0.3 million and approximately $12.4 million from the healthcare operations as a result of the Progressive Care acquisition on July 1, 2023.generatedwere as follows: $ 9,887,890 65 $ - - $ 9,887,890 100 2,930,721 19 2,630,826 100 299,895 11 12,818,611 84 2,630,826 100 10,187,785 387 2,471,560 16 - - 2,471,560 100 $ 15,290,171 100 $ 2,630,826 100 $ 12,659,345 481 $1,588,466$15.3 million compared to approximately $1,299,373$2.6 million of revenues for the three months ended September 30, 2016,2022, an increase in total revenues of $289,093approximately $12.7 million or 22.3%481.2%. Sales for the nine months ended September 30, 2017 were $4,547,491 compared to approximately $3,783,230 of revenues during the nine months ended September 30, 2016, a $764,261 increase in total revenues or 20.2%. The Company attributes the increases in revenue to an increase in recurring revenue related customer and the introduction of new product lines, offset by exchange rate variances as described above.Cost of Sales.During the three months ended September 30, 2017, cost ofTotal e-Commerce revenues increased to $1,240,654 compared to $1,035,278were approximately $2.9 million for the three months ended September 30, 2016, an increase of $205,376 or 19.8%. For the nine months ended September 30, 2017, cost of revenues increased to $3,589,5372023, as compared to $2,935,631$2.6 million for the nine months ended September 30, 2016, an increase of $653,906 or 22.3%. Gross profit margins during the three months ended September 30, 20172022, an increase of approximately $0.3 million or 11.4%. The increase was mainly attributable to an increase in sales of satellite communication devices and associated recurring airtime revenues of approximately $0.3 million.21.9% as compared to 20.3%approximately $12.4 million for the comparable period in the prior year. During the ninethree months ended September 30, 2017, gross profit margins were 21.1%2023 as compared to 22.4%. We expect our cost of revenues to continue to increase during fiscal 2017 and beyond, as we expand our operations and begin generating additional revenues under our current business. However, we are unable at this time to estimate the amounta result of the expected increases. Gross margins reacted negatively withProgressive Care acquisition on July 1, 2023. The pharmacy filled approximately 122,000 prescriptions for the devaluation of GBP against US$ following the BREXIT vote and in order to remain competitive we had to maintain product pricing. In addition, we attracted new reseller customers who buy in larger quantities at lower margins.three months ended September 30, 2023Expenses.Expenses. $ 4,187,429 $ 1,699,711 $ 2,487,718 146 2,483,432 651,219 1,832,213 281 520,726 356,306 164,420 46 871,066 136,457 734,609 538 $ 8,062,653 $ 2,843,693 $ 5,218,960 184 20172023, were $574,971,approximately $8.1 million, an increase of $3,174,approximately $5.2 million on or 0.6%183.5%, from total operating expenses for the three months ended September 30, 20162022, of $571,797. For the nine months ended September 30, 2017 total operating expenses were $2,226,923, as compared to $2,058,131, for the same period in 2016, an increase of $168,792 or 8.2%.approximately $2.8 million. Factors contributing to the increase are described below.$158,312approximately $4.2 million and $150,024$1.7 million for the three months ended September 30, 20172023 and 2016,2022, respectively, an increase of $8,288approximately $2.5 million or 5.5%146.4%. The increase for the three months ended September 30, 2023, was mainly attributable to the increase in stock-based compensation of approximately $1.2 million, other operating expenses as it relates to the e-Commerce operations of approximately $0.3 million, and approximately $1.2 million as it relates to operating expenses of the healthcare operations as a result of the Progressive Care acquisition on July 1, 2023. $ 21,123,687 $ 9,080,083 $ 12,043,604 133 % 15,074,319 7,032,847 8,041,472 114 % 6,049,368 2,047,236 4,002,132 195 % 14,121,207 6,580,039 7,541,168 115 % (8,071,839 ) (4,532,803 ) (3,539,036 ) 78 % (556,902 ) 231,981 (788,883 ) (340 )% (7,514,937 ) (4,764,784 ) (2,750,153 ) 58 % (75,034 ) - (75,034 ) 100 % (7,589,971 ) (4,764,784 ) (2,825,187 ) 59 % 6,138,051 - 6,138,051 100 % (1,439,637 ) (3,454,436 ) 2,014,799 (58 )% (2,891,557 ) (8,219,220 ) 5,327,663 (65 )% 811,239 - 811,239 100 % $ (2,080,318 ) $ (8,219,220 ) $ 6,138,902 (75 )% 2017, selling, general2023 and administrative expenses were $456,935 as compared to $456,881,2022, we recognized overall revenue from operations of approximately $21.1 million and $9.1 million, respectively, an overall increase of $54 or 0.01%. The increaseapproximately $12.0 million for the three and nine months ended September 30, 2017,2023, when compared to the nine months ended September 30, 2022.The increase in revenue was primarily attributable to an increase of approximately $12.4 million in the healthcare operations as a result of the Progressive Care acquisition as of July 1, 2023. e-Commerce revenues decreased by approximately $0.3 million and was mainly due to lower exchange rates innon-recurring revenue from the current periodUkraine war during the first half of 2022, partially offset by variable expenses whichan increase as revenue increases.in sales of satellite communication devices and associated recurring airtime revenues for the nine months ended September 30, 2023, when compared to the same period in 2022.Salaries, wagesRevenue.
Sales of products, net: payroll taxespharmacy prescription, and 340B contract revenues. For the nine months ended September 30, 2023, overall revenues were $178,762approximately $21.1 million compared to $9.1 million of revenues for the nine months ended September 30, 2022, an increase in of approximately $12.0 million or 132.6%.$158,720,approximately $9.1 million for the nine months ended September 30, 2023 and 2022, respectively. The decrease was approximately $0.3 million and mainly attributable to the non-recurring revenue from the Ukraine war during the first half of 2022 of approximately $1.2 million, partially offset by an increase in sales of satellite communication devices and associated recurring airtime revenues of approximately $0.9 million for the nine months ended September 30, 2023, when compared to the same period in 2022.2017 and 2016, respectively, an increase of $20,042, or 12.6%. For the nine months ended September 30, 2017, salaries, wages and payroll taxes were $513,349 as compared to $503,556, an increase of $9,793, or 1.9%, for the same period in the prior year. For the three and nine months ended September 30, 2017, the increase is attributable to an increase in compensation2023 as a result of additional employees, offset by the decrease in the exchange rate.20Stock based compensationwas $0 and $600,000 for the three and nine months ended September 30, 2017,Progressive Care acquisition as compared to $0 for the three and nine months ended September 30, 2016. On May 26, 2017, the Company issued 5,000,000 options to Mr. Phipps, 3,750,000 options to Theresa Carlise and 20,000,000 options to certain employees of the Company.July 1, 2023. The employees are the adult children of our Chief Executive Officer. All of the options are fully vested and have an exercise price of $0.01 per share and a term of 10 years.Professional fees were $163,754 and $192,834pharmacy filled approximately 122,000 prescriptions for the three months ended September 30, 2017 and 2016, respectively, a decrease of $29,080, or 15.1%2023For $ 7,495,601 $ 3,434,916 $ 4,060,685 118 4,039,307 1,957,592 2,081,715 106 1,385,474 839,509 545,965 65 1,200,825 348,022 852,803 245 $ 14,121,207 $ 6,580,039 $ 7,541,168 115 2017, professional fees2023, were $432,320 as compared to $881,318, a decreaseapproximately $14.1 million, an increase of $448,998approximately $7.5 million or 51.0%114.6%, from total operating expenses for the nine months ended September 30, 2016. The decrease was primarily attributable2022, of approximately $6.6 million. Factors contributing to the Company’s decrease of investor relation fees from the same period in the prior year.increase are described below.DepreciationSelling, general and amortizationadministrative (“SG&A”) expenses were $74,143approximately $7.5 million and $70,219$3.4 million for the three months ended September 30, 2017 and 2016, respectively, an increase of $3,924 or 5.6%. For the nine months ended September 30, 2017 depreciation2023 and 2022, respectively, an increase of approximately $4.1 million or 118.2%. The increase for the nine months ended September 30, 2023, was mainly attributable to the increase in stock-based compensation of approximately $2.6 million, other operating expenses of approximately $0.4 million as it relates to the e-Commerce operations, and operating expenses of approximately $1.1 million as it relates to the healthcare operations of the Progressive Care acquisition on July 1, 2023, when compared to the same period in 2022.$224,319 as compared to $216,375,approximately $1.2 million and $0.4 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of $7,944,approximately $0.9 million or 3.7%245.0%. The increase was mainly attributable to depreciation and amortization as it relates to the healthcare operations from Progressive Care acquisition on July 1, 2023, of approximately $0.7 million and approximately $0.2 million as it relates to the same period in the prior year. For the three and nine months, the increase in depreciation is proportionately related to an increased in website development, which has a shorter useful life and an increase in computer equipment, respectively.e-Commerce operations.20172023 and beyond as we expand our operations and begin generating additional revenues under our current business. However, we are unable at this time to estimate the amount of the expected increases.Expense.Expense.expenses were $38,540 compared to $30,970 during the three months ended September 30, 2017expense was approximately ($0.6 million) and 2016 respectively, an increase of $7,570. Our total other (income) expenses were $2,340,370 compared to $241,932$0.2 million during the nine months ended September 30, 20172023 and 20162022, respectively, an increaseoverall favorable impact of $2,098,438.approximately $0.8 million. The increase is primarilyfavorable impact was attributable to interest earned, management fees earned during the expensefirst half of $2,308,981 related to the Series J Preferred stock issuance, for price protection to certain Subscribers2023, write off of Preferred Series F, Preferred Series Gaged payables, and Preferred Series H. The additional issuance for price protection, while expensed as other expense, also results as an increase to additional paidoffset by unfavorable fluctuations in capital.Net Income (Loss)Equity Method Investment.net loss before income tax of $265,699, for the three months ended September 30, 2017 as compared to a net lossgain in equity of $338,672, for the three months ended September 30, 2016. We recorded net loss before income taxour affiliate, Progressive Care, of $3,609,339,approximately $6.1 million for the nine months ended September 30, 20172023, as compareda result of a change in the accounting treatment from equity method to consolidation as of July 1, 2023. See Note 14 – Equity Method Investment. For the nine months ended September 30, 2023 and 2022, we recorded a net loss in the equity of $1,452,463,our affiliate, Progressive Care, of approximately $1.4 million and $3.5 million, respectively, which was accounted for as an equity method investment. 2016.2023 and 2022, respectively. The increasedecrease in the net loss iswas a result of the factors as described above.(Loss) IncomeLoss.a gaincomprehensive losses for foreign currency translation adjustments for the three months ended September 30, 2017of approximately $0.1 million and 2016, of $18,485 and $19,888, respectively. For$0.2 million for the nine months ended September 30, 20172023 and 2016, we recorded a gain of $32,926 and $17,513,2022, respectively. The fluctuations of the increase arechange was primarily attributed to the increase recognized due to exchange rate variances.AtAs of September 30, 2017,2023, we had a cash balance of $268,216.approximately $26.4 million. Our working capital is $161,769was approximately $29.1 million at September 30, 2017.2023. 20172023 increased by approximately 80.9%106.5% from December 31, 20162022 primarily due to cash received during capital raise in April 2023 and included cash, accounts receivable, unbilled revenue, inventory, prepaid and other current assets.Progressive Care consolidation as of July 1, 2023..20172023 increased by 78.9%approximately $12.6 million from December 31, 2016 and included our accounts payable, derivative liabilities,2022 primarily due to related party and deferred revenue and other liabilities in the ordinary courseProgressive Care consolidation as of our business.July 1, 2023.Our recent sourcesAs of financingthe date of this report, the Company’s existing cash resources and existing borrowing availability are discussed in more detail under “Recent Transactions,” above. Growing andsufficient to support planned operations for the next 12 months. As a result, management believes that the existing financial resources are sufficient to continue operating our business will require significant cash outlays, liquidity reserves and capital expenditures and commitments to respond to business challenges, including developing or enhancing new or existing products.activities for at least one year past the issuance date of the financial statements.21 $ (4,248,304 ) $ (2,731,076 ) 5,388,269 (7,471,118 ) 6,330,491 5,534,318 (15,984 ) (130,494 ) 7,454,472 (4,798,370 ) $ 26,345,704 $ 12,469,608 in by operating activities totaled approximately $4.3 million and $2.7 million for the nine months ended September 30, 2017 amounted to $356,1332023 and were2022, respectively, and changed by approximately $1.5 million period over period. The unfavorable change of approximately $1.5 million was primarily attributable to ourthe following:$3,609,339, total amortization expense of $18,750, depreciation of $205,569, imputed interest of $446, stock based compensation of $600,000, preferred price based stock protection expense of $2,308,981, amortization of prepaid expense for stock based compensation for services of $121,096 offset byapproximately $5.3 million;fair valueother non-cash items of derivativeapproximately $4.5 million and include stock-based compensation, amortization, depreciation, loss in equity of equity method investment, and gain in equity method investment;$1,237approximately $4.0 million and net change in assets and liabilitiesmainly a result of $399, primarily attributable to an increase in accounts receivable of $411,498, increase in inventory of $62,721, increase in unbilled revenue of $11,346, an increase in prepaid expense of $101,034, increase in other current assets of $29,827, increase inincreased accounts payable due to the acquisition of $491,916 and an increase in deferred revenueProgressive Care as of $124,111.July 1, 2023.Net cash flows used in operating activities for the nine months ended September 30, 2016 amounted to $772,935 and were primarily attributable to our net loss of $1,452,463, amortization expense of $18,750, amortization of dept discount $602,515, depreciation of $197,625, imputed interest of $912, issuance of common stock for prepaid services of $164,608 and offset by change in fair value of derivative liabilities of $425,790 and net change in asset and liabilities of $120,908, primarily attributable to an increase in accounts receivable of $28,139, increase in inventory of $99,202, decrease in unbilled revenue of $17,415, decrease in prepaid expense of $115,359, increase in other current assets of $1,909, increase in accounts payable of $131,321 and an decrease in deferred revenue of $13,937.Net cash flows used in investing activities were $20,676 and $34,967 for the nine months ended September 30, 2017 and 2016, respectively. We purchased property and equipment of $20,676 during the nine months ended September 30, 2017. We purchased property and equipment of $34,967 during the nine months ended September 30, 2016.Financing Activitiesfinancinginvesting activities were $500,438approximately $5.4 million and ($43,027)7.5 million) for the nine months ended September 30, 20172023 and 2016, respectively. 2022, respectively, and changed by approximately $12.9 million period over period. The favorable change of approximately $12.9 million was primarily attributable to the following:$500,438approximately $6.3 million and $5.5 million for the nine months ended September 30, 20172023 and were for2022, respectively, and changed by approximately $0.8 million period over period. The cash provided by financing activities during the nine months ended September 30, 2023 and 2022 was primarily attributable to proceeds from sale of preferred stock for $500,000 and proceeds from to a related party of $438. Net cash used in financing activities were repayments of convertible notes payable of $100,834 and proceeds from related party payable of $57,807, respectivelycapital raises during those periods offset by payments on loans.guaranteeguaranteed contract, although we do have obligations under certain sales arrangements including purchase obligations to vendors Critical Accounting Policies and EstimatesCritical accounting estimates are those that management deems to be most important to the portrayal of our financial condition and results of operations, and that require management’s most difficult, subjective or complex judgments, due to the need to make estimates about the effects of matters that are inherently uncertain. We have identified our critical accounting estimates which are discussed below.22Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include the valuation of stock based charges, the valuation of derivatives and the valuation of inventory reserves.Effect of Exchange Rate on ResultsThe Company’s reporting currency is US Dollars. The accounts of one of the Company’s subsidiaries, GTCL, is maintained using the appropriate local currency, Great British Pound, as the functional currency. All assets and liabilities are translated into U.S. Dollars at balance sheet date, shareholders’ equity is translated at historical rates and revenue and expense accounts are translated at the average exchange rate for the year or the reporting period. The translation adjustments are reported as a separate component of stockholders’ equity, captioned as accumulated other comprehensive (loss) gain. Transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the statements of operations.The relevant translation rates are as follows: for the three and nine months ended September 30, 2017 closing rate at 1.30240 US$: GBP, average rate at 1.27779 US$: GBP and 1.25801 US$: GBP. For the three and nine months ended September 30, 2016 closing rate at 1.3311 US$: GBP, average rate at 1.43544 US$: GBP and 1.43414 US$: GBP and for the year ended 2016 closing rate at 1.2345 US$: GBP, average rate at 1.35585 US$ GBP.Global Telesat Communications LTD, (GTCL) represents 67.4% of total company sales for the nine months ended September 30, 2017 and as such, currency rate variances have an impact on results. For the nine months ended September 30, 2017 the net effect on revenues were impacted by the differences in exchange rate from yearly average exchange of 1.39353 to 1.27500. Had the yearly average rate remained, sales for the nine months would have been higher by $287,576. GTCL comparable sales in GBP, its home currency, increased 21% or £425,714, from £2,000,471 to £2,426,185, for the nine months ended September 30, 2017 as compared to September 30, 2016.Basis of Presentation and Principles of ConsolidationThe consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and the rules and regulations of the U.S Securities and Exchange Commission for Interim Financial Information. All intercompany transactions and balances have been eliminated. All adjustments (consisting of normal recurring items) necessary to present fairly the Company’s financial position as of September 30, 2017, and the results of operations and cash flows for the nine months ended September 30, 2017 have been included. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year.Accounts ReceivableThe Company extends credit to its customers based upon a written credit policy. Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate for the amount of probable credit losses in the Company’s existing accounts receivable. The Company establishes an allowance of doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. Receivable balances are reviewed on an aged basis and account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not require collateral on accounts receivable. As of September 30, 2017, and December 31, 2016, there is an allowance for doubtful accounts of $427 and $6,720.Accounting for Derivative InstrumentsDerivatives are required to be recorded on the balance sheet at fair value. These derivatives, including embedded derivatives in the Company’s structured borrowings, are separately valued and accounted for on the Company’s balance sheet. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimatesResearch and DevelopmentResearch and Development (“R&D”) expenses are charged to expense when incurred. The Company has consulting arrangements which are typically based upon a fee paid monthly or quarterly. Samples are purchased that are used in testing, and are expensed when purchased. R&D costs also include salaries and related personnel expenses, direct materials, laboratory supplies, equipment expenses and administrative expenses that are allocated to R&D based upon personnel costs.23Foreign Currency TranslationThe Company’s reporting currency is US Dollars. The accounts of one of the Company’s subsidiaries is maintained using the appropriate local currency, (Great British Pound) GTCL as the functional currency. All assets and liabilities are translated into U.S. Dollars at balance sheet date, shareholders’ equity is translated at historical rates and revenue and expense accounts are translated at the average exchange rate for the year or the reporting period. The translation adjustments are deferred as a separate component of stockholders’ equity, captioned as accumulated other comprehensive (loss) gain. Transaction gains and losses arising from exchange rate fluctuation on transactions denominated in a currency other than the functional currency are included in the statements of operations.The relevant translation rates are as follows: for the three and nine months ended September 30, 2017 closing rate at 1.3399 US$: GBP, average rate at 1.30842 US$: GBP and 1.27500 US$: GBP. For the three and nine months ended September 30, 2016 closing rate at 1.29820 US$: GBP, average rate at 1.31320 US$: GBP and 1.39353 US$: GBP and for the year ended 2016 closing rate at 1.2345 US$: GBP, average rate at 1.35585 US$ GBP.Revenue Recognition and Unearned RevenueThe Company recognizes revenue from satellite services when earned, as services are rendered or delivered to customers. Equipment sales revenue is recognized when the equipment is delivered to and accepted by the customer. Only equipment sales are subject to warranty. Historically, the Company has not incurred significant expenses for warranties.The Company’s customers generally purchase a combination of our products and services as part of a multiple element arrangement. The Company’s assessment of which revenue recognition guidance is appropriate to account for each element in an arrangement can involve significant judgment. This assessment has a significant impact on the amount and timing of revenue recognition.Revenue is recognized when all of the following criteria have been met:●Persuasive evidence of an arrangement exists. Contracts and customer purchase orders are generally used to determine the existence of an arrangement.●Delivery has occurred. Shipping documents and customer acceptance, when applicable, are used to verify delivery.●The fee is fixed or determinable. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.●Collectability is reasonably assured. We assess collectability based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history.In accordance with ASC 605-25,Revenue Recognition—Multiple-Element Arrangements,based on the terms and conditions of the product arrangements, the Company believes that its products and services can be accounted for separately as its products and services have value to the Company’s customers on a stand-alone basis. When a transaction involves more than one product or service, revenue is allocated to each deliverable based on its relative fair value; otherwise, revenue is recognized as products are delivered or as services are provided over the term of the customer contract.Property and EquipmentProperty and equipment are carried at historical cost less accumulated depreciation. Depreciation is based on the estimated service lives of the depreciable assets and is calculated using the straight-line method. Expenditures that increase the value or productive capacity of assets are capitalized. Fully depreciated assets are retained in the property and equipment, and accumulated depreciation accounts until they are removed from service. When property and equipment are retired, sold or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Repairs and maintenance are expensed as incurred.The estimated useful lives of property and equipment are generally as follows:YearsOffice furniture and fixtures4Computer equipment4Appliques10Website development224Impairment of long-lived assetsThe Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not consider it necessary to record any impairment charges during the periods ended September 30, 2017 and December 31, 2016, respectively.Fair value of financial instrumentsThe Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that require the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilitiesLevel 2: Observable market-based inputs or unobservable inputs that are corroborated by market dataLevel 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable input (Level 3) from January 1, 2016 to September 30, 2017: Conversion
feature
derivative
liability Warrant
liability Total Balance at January 1, 2016 $ 614,035 $ 4,356 $ 618,391 Change in fair value included in earnings (422,974 ) (3,119 ) (426,093 ) Net effect on additional paid in capital (191,061 ) - (191,061 ) Balance at December 31, 2016 $ - $ 1,237 $ 1,237 Change in fair value included in earnings - (1,237 ) (1,237 ) Balance at September 30, 2017 $ - $ - $ - The Company did not identify any other assets or liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with the accounting guidance. The carrying amounts reported in the balance sheet for cash, accounts payable, and accrued expenses approximate their estimated fair market value based on the short-term maturity of the instruments.Share-Based PaymentsCompensation cost relating to share based payment transactions are recognized in the financial statements. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award).25Recent Accounting PronouncementsThe Company does not believe that any recently issued accounting pronouncements will have a material impact on its financial statements.QUALITIATIVEQUALITATIVE DISCLOSURES ABOUT MARKET RISKPROCEDURES.PROCEDURESWe maintain “disclosure(a) Evaluation of disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e)procedures. In accordance with Rule 13a-15(b) under the Securities Exchange Act of 1934, (the “Exchangeas amended (“Exchange Act”) we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness and design of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, our CEO and CFO have concluded that are designedas of September 30, 2023, our disclosure controls and procedures were effective to ensureprovide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange CommissionSEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer,CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. In designingevaluatingCFO, does not expect that our disclosure controls and procedures management recognized that disclosure controlswill prevent or detect all errors and procedures,fraud. Any control system, no matter how well conceiveddesigned and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.Company have been detected. The design of any disclosurea control system must reflect the fact that there are resource constraints, and the benefits of controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there canmust be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.considered relative to their costs.With respect to the nine months ending September 30, 2017, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure(c) Changes in internal controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934. Based upon our evaluation regarding the fiscal quarter ended September 30, 2017, our management, including our principal executive officer and principalover financial officer, has concluded that our disclosure controls and procedures were ineffective due to our limited internal audit functions and lack of ability to have multiple levels of transaction review. The Companyreporting. There has been actively addressing the evaluation and is pursuing upgrading its accounting software.Management is in the process of determining how best tono change our current system and implement a more effective system to insure that information required to be disclosed in this quarterly report on Form 10-Q has been recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this problem, and intends to develop procedures to address them to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.Changes in Internal ControlsThere have been no changes in our internal control over financial reporting during theour fiscal quarter ended September 30, 20172023, that havehas materially affected, or areis reasonably likely to materially affect, our internal controls over financial reporting.None.On June 22, 2021, Thomas Seifert’s employment as the Company’s Chief Financial Officer was terminated for cause. Mr. Seifert asserts that the termination was not for cause and that he is owed all compensation payable under his employment agreement executed in June 2021. The Company’s position is that Mr. Seifert is not owed any additional consideration or compensation relating to his prior service with the Company or arising under any employment agreement. The Company and Mr. Seifert are currently engaged in litigation over the matter of his employment and termination. The Company believes it has adequate defenses to Mr. Seifert’s claims and has advanced claims against Mr. Seifert including, but not limited to, breach of the employment agreement, breach of the fiduciary, fraud in the inducement in connection with the employment agreement, fraudulent misrepresentation, and constructive fraud. The Company does not expect to seek substantial monetary relief in the litigation. This dispute is pending before the District Court for the Southern District of Florida under Case No. 1:21-cv-22436-DPG.AND USEAUSE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIESThere were no unregistered securities sold by us during the quarter ended September 30, 2017, that were not otherwise disclosed by us in a Current Report on Form 8-K.None.SAFETY DISCLOSURESAFEFTY DISCLOSURESNone.On November 14, 2023, the Employment Agreement of Mr. Paul Thomson, the Company's Senior Vice President for Mergers, Acquisitions and Special Projects, expired and Mr. Thomson retired from the Company.31.110.1 Distribution Agreement, dated as of October 12, 2023, by and between OPKO Health Spain, S.L.U. and NextPlat Corp (incorporated by reference from Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on October 18, 2023) Link baseLinkbase DocumentLink baseLinkbase Document* Filed herein104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 27* Portions of the this document have been omitted because they are not material and are the type that the Company treats as private and confidential. 14, 201713, 2023ORBITAL TRACKING CORP. David PhippsCharles M. FernandezDavid Phipps and Chairman Theresa CarliseCecile Munnik Treasurer and SecretaryOfficer and Principal Accounting Officer)28