| Summary of Business Operations and Significant Accounting Policies | Summary of Business Operations and Significant Accounting Policies Nature
of Operations and Business Organization NextPlay
Technologies, Inc. and its consolidated subsidiaries (“NextPlay”, “we”, “our”, “us”,
or the “Company”) is building a technology solutions company, offering games, in-game advertising, crypto-banking,
connected TV and travel booking services to consumers and corporations within a growing worldwide digital ecosystem. NextPlay’s
engaging products and services utilize innovative advertising technology (AdTech), Artificial Intelligence (AI) and financial
technology (FinTech) solutions to leverage the strengths and channels of its existing and acquired technologies. NextPlay
is organized into three ( 3 In the Interactive Digital Media Division, NextPlay closed its acquisition
of HotPlay Enterprise Limited and its In-Game Advertising (“IGA”) platform on June 30, 2021, and acquired a 51% 100 In
the Finance and Technology Division, the Company’s acquisition of International Financial Enterprise Bank (“IFEB”),
now called NextBank International, Inc. (“NextBank”), is expected to allow NextPlay to offer individuals and households
asset management and banking services, and travel related services such as travel finance and travel insurance, subject to regulatory
approval and licensing. Our company in accordance with Thailand foreign ownership laws, holds an
indirect control of Longroot (Thailand) Company Limited (“Longroot”) which operates Initial Coin Offering (“ICO”)
Portal which is approved and regulated by the Thai Securities and Exchange Commission (“Thai SEC”). The Portal enables us
to crypto-securitize an array of high quality alternative assets, such as video games, insurance contracts, and real estate. These digital
assets serve as a new asset class and will create significant opportunities to accelerate products and services within the Fintech division’s
asset management business. Leveraging Longroot Thailand’s blockchain technology, NextPlay is
developing blockchain products and solutions to support its other business units, such as a next generation insurance solution to be offered
through our Travel division. Our Travel division currently offers booking solutions for both business
and leisure travel and plans to expand its product and services offerings by integrating multiple technologies from other NextPlay divisions. Reverse Acquisition of HotPlay Enterprise Ltd. On
July 23, 2020, the Company (then known as Monaker Group, Inc. (“Monaker”)) entered into a Share Exchange Agreement (as
amended from time to time, the “Share Exchange Agreement”) with HotPlay Enterprise Limited (“HotPlay”) and
the stockholders of HotPlay (the “HotPlay Stockholders”). Pursuant to the Share Exchange Agreement, Monaker exchanged
shares of its common stock for 100% Reverse
Acquisition HotPlay, as the accounting acquirer, recorded the assets acquired and liabilities
assumed of Monaker in the reverse acquisition at its fair value as of the acquisition date. HotPlay’s historical financial statements
have replaced Monaker’s historical consolidated financial statements with respect to periods prior to the completion of the merger,
with retroactive adjustments to HotPlay’s legal capital to reflect the legal capital of Monaker. Monaker (which was renamed NextPlay Technologies,
Inc. in connection with the reverse acquisition) remains the continuing registrant and reporting company. HotPlay
was determined to be the accounting acquirer based on the following facts and circumstances: (1) members of HotPlay and HotPlay
Stockholders owned approximately 72.61 The Company recorded all tangible and intangible assets acquired and liabilities
assumed at their preliminary estimated fair values on the reverse acquisition date. The following represents the allocation of the estimated
purchase consideration:
Reverse Acquisition of HotPlay Enterprise Ltd. (6/30/21)
Fair Value of Monaker assets acquired
Cash $ 9,323,686
Current assets $ 24,082,699
Non-current assets $ 26,247,848
Net assets acquired $ 59,654,233
Fair Value of Monaker liabilities assumed
Current liabilities $ 32,482,320
Non-current liabilities $ 5,420,131
Net liabilities assumed $ 37,902,451
Net assets acquired $ 21,751,782
Purchase consideration
Number of Monaker common shares outstanding as of 6/30/2021 23,854,203
Monaker share price as of 6/30/2021 $ 2.24
Preliminary estimate of fair value of common shares $ 53,433,415
Fair value of total estimated consideration transferred $ 53,433,415
Purchase Price Allocation
Fair value of Monaker net assets acquired as of 6/30/2021 $ 21,751,782
Fair value of total estimated consideration transferred $ 53,433,415
Goodwill $ 31,681,633 Interim
Financial Statements These unaudited condensed consolidated financial statements have been prepared
in accordance with generally accepted accounting principles in the United States (“ US GAAP SEC The
results of operations for the six months ended August 31, 2021, are not necessarily indicative of the results to be expected for
the full fiscal year ending February 28, 2022. Principles
of Consolidation The
accompanying condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All
material inter-company transactions and accounts have been eliminated in consolidation. Use
of Estimates The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those
estimates. These differences could have a material effect on the Company’s future results of operations and financial position.
Significant items subject to estimates and assumptions include the fair value of investments, the carrying amounts of intangible
assets, depreciation and amortization, the valuation of stock options, and deferred income taxes. Cash
and Cash Equivalents For
purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money
market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents.
The Company had no cash equivalents on August 31, 2021 and February 28, 2021. Prepaid
Expenses and Other Current Assets The
Company records cash paid in advance for goods and/or services to be received in the future as prepaid expenses. Prepaid expenses
are expensed over time according to the period where it is indicated on the contract. Website
Development Costs The
Company accounts for website development costs in accordance with Accounting Standards Codification (ASC) 350-50 “ Website
Development Costs three-year Loans Receivable Loans that the Company has the intent and ability
to hold for the foreseeable future, or until maturity or pay-off, generally are stated at their outstanding principal amount adjusted
for charge-offs and the allowance for loan losses. Interest is accrued as earned based upon the daily outstanding principal balance. The accrual of interest is generally discontinued
at the time a loan is 90 days past due, unless the credit is well-secured and in the process of collection. Past due status is based on
contractual terms of the loan. In all cases, loans are placed on non-accrual or charged- off at an earlier date if collection of principal
or interest is considered doubtful. All interest accrued but not collected for loans placed
on nonaccrual or charged-off is reversed against interest income. Interest on these loans is accounted for on the cash-basis or cost recovery
method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually
due are brought current and future payments are reasonably assured. As of August 31, 2021, there were no loans placed
on non-accrual. Interest and Non-interest Bearing Deposits During the period ended August 31, 2021, the Company
had interest and non-interest- bearing deposits received from customers with interest rates ranging from 0% to 4% payable per annum. Software
Development Costs The
Company capitalizes internal software development costs subsequent to establishing technological feasibility of a software application
in accordance with guidelines established by “ ASC 985-20-25 Computer, Furniture and Equipment The Company purchases computers, laptops, furniture and fixture. These
are originally recorded at cost and stated at cost less accumulated depreciation. The computers and laptops are depreciated over a useful
life of 3 years 5 years Business
Combination The
Company uses the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ ASC 805 Impairment
of Intangible Assets In
accordance with ASC 350-30-65 “ Goodwill and Other Intangible Assets
1. Significant underperformance
compared to historical or projected future operating results;
2. Significant changes in the
manner or use of the acquired assets or the strategy for the overall business; and
3. Significant negative industry
or economic trends. When
the Company determines that the carrying value of an intangible asset 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 to the current business model.
Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.
Intangible assets that have finite useful lives are amortized over their useful lives. The Company incurred depreciation and amortization expense
of $ 1,526,740 194,114 Foreign
Currency Translation The
Company prepares the financial statements of its foreign subsidiaries using the local currency as the functional currency. The
assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at the rates of exchange at
the balance sheet date with the resulting translation adjustments included as a separate component of stockholders’ equity
through other comprehensive income (loss) in the consolidated statements of operations and comprehensive loss. Income
and expenses are translated at the average monthly rates of exchange. The Company includes realized gains and losses from foreign
currency transactions in other income (expense), net in the consolidated statements of net and comprehensive loss. The
effect of foreign currency translation on cash and cash equivalents is reflected in cash flows from operating activities on the
consolidated statements of cash flows. Reclassification Certain
prior period amounts have been reclassified to conform with the current period presentation. The reclassification has no impact
on the total assets, total liabilities, stockholders’ equity and net loss for the period. Earnings
per Share Basic
earnings per share are computed by dividing net income or loss by the weighted average number of shares of common stock outstanding
during the period. Diluted earnings per share are computed by dividing net income (loss) by the weighted average number of shares
of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. For the six months
ended August 31, 2021, convertible notes payables were excluded from the computation of diluted net loss per share as the result
of the computation was anti-dilutive. Revenue
Recognition Travel We
recognize revenue when the customer has purchased the product, the occurrence of the earlier of date of travel or the date of
cancellation has expired, the sales price is fixed or determinable and collectability is reasonably assured. Revenue
for customer travel packages purchased directly from the Company are recorded gross (the amount paid to the Company by the customer
is shown as revenue and the cost of providing the respective travel package is recorded to cost of revenues). We
generate our revenues from sales directly to customers as well as through other distribution channels of tours and activities
at destinations throughout the world. Payments
for tours or activities received in advance of services being rendered are recorded as deferred revenue and recognized as revenue
at the earlier of the date of travel or the last date of cancellation (i.e., the customer’s refund privileges lapse). NextBank
International NextBank
International provides traditional banking services in niche-focused businesses, including commercial and residential real estate
and the origination and sale of loans and receivables financing, among other types of lending services. Revenue is recognized
from two sources, interest income and loan fees. Interest
is accrued as earned based upon the daily outstanding principal balance. The accrual of interest is generally discontinued at
the time a loan is 90 days past due, unless the credit is well-secured and in the process of collection. Past due status is based
on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged- off at an earlier date if collection
of principal or interest is considered doubtful. All
interest accrued but not collected for loans placed on nonaccrual or charged-off is reversed against interest income. Interest
on these loans is accounted for on the cash-basis or cost recovery method, until qualifying for return to accrual. Loans are returned
to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably
assured. As of August 31, 2021, there were no loans placed on non-accrual. Revenue
is also recognized on service fees such as loan origination fees, brokering fees, and deposit account fees. Digital
Media Revenue
is generated from subscriptions and services rendered. Subscription revenues are deferred and recognized as the service is performed
each month. Revenue from services is recognized when the contractual performance obligation is met. Cost
of Revenue Cost of revenue consists of cost of the tours and activities, commissions
and merchant fees charged by credit card processors, interest expense, loan related commissions, cost of services and sub-contractors. Selling
and Promotions Expense Selling
and promotion expenses consist primarily of advertising and promotional expenses, expenses related to our participation in industry
conferences, and public relations expenses. The expense for the six months ended August 31, 2021 and August 31, 2020, was $ 361,629 0 Stock
Based Compensation Stock-based
compensation is accounted for based on the requirements of ASC 718, “ Compensation – Stock Compensation The Company adopted ASU No. 2018-7, Compensation-Stock Compensation
(Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ASU 2018-7 Warrant
Modifications The
Company treats a modification of the terms or conditions of an equity award in accordance with ASC Topic 718-20-35-3, by treating
the modification as an exchange of the original award for a new award. In substance, the entity repurchases the original instrument
by issuing a new instrument of equal or greater value, incurring additional compensation cost for any incremental value. Incremental
compensation cost is measured as the excess, if any, of the fair value of the modified award determined in accordance with the
provisions of ASC Topic 718-20-35-3 over the fair value of the original award immediately before its terms are modified, measured
based on the share price and other pertinent factors at that date. Fair
Value of Financial Instruments The
Company has adopted the provisions of ASC Topic 820, Fair Value Measurements, which defines fair value, establishes a framework
for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820 does not require any new fair
value measurements, but it does provide guidance on how to measure fair value by providing a fair value hierarchy used to classify
the source of the information. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs)
and an entity’s own assumptions (unobservable inputs). The
hierarchy consists of three levels:
● 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 of 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 or liabilities. The
Company uses Level 3 inputs for its valuation methodology for the warrant derivative liabilities and embedded conversion option
liabilities. Financial instruments consist principally of cash, accounts receivable,
investments in unconsolidated affiliates, other receivable, net, accounts payable, accrued liabilities, notes payable, related parties,
line of credit and certain other current liabilities. The carrying amounts of such financial instruments in the accompanying balance sheets
approximate their fair values due to their relatively short-term nature. It is management’s opinion that the Company is not exposed
to any significant currency or credit risks arising from these financial instruments. Leases The
Company utilizes operating leases for its offices. The Company determines if an arrangement is a lease at inception. Right-of-use
assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s
contractual obligation to make lease payments under the lease. Operating leases are included in operating lease right-to-use assets,
non-current, and operating lease liabilities current and non-current captions in the consolidated balance sheets. Operating
lease right-to-use assets and liabilities are recognized on the commencement date based on the present value of lease payments
over the lease term. Lease agreements may contain periods of free rent or reduced rent, predetermined fixed increases in the minimum
rent and renewal or termination options, all impacting the determination of the lease term and lease payments to be used in calculating
the lease liability. Lease cost is recognized on a straight-line basis over the lease term. The Company uses the implicit rate
in the lease when determinable. As most of the Company’s leases do not have a determinable implicit rate, the Company uses
a derived incremental borrowing rate based on borrowing options under its credit agreement. The Company applies a spread over
treasury rates for the indicated term of the lease based on the information available on the commencement date of the lease. Recent
Accounting Pronouncements ACCOUNTING STANDARDS UPDATE 2016-13, FINANCIAL INSTRUMENTS—CREDIT
LOSSES (TOPIC 326) On June 16, 2016, the FASB completed its Financial
Instruments—Credit Losses project by issuing Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses
(Topic 326). The new guidance requires organizations to measure all expected credit losses for financial instruments held at the reporting
date based on historical experience, current conditions, and reasonable and supportable forecasts. The new guidance; (i) eliminates the probable initial
recognition threshold in current GAAP and, instead, reflects an organization’s current estimate of all expected credit losses over
the contractual term of its financial assets, (ii) broadens the information that an entity can consider when measuring credit losses to
include forward-looking information, (iii) increases usefulness of the financial statements by requiring timely inclusion of forecasted
information in forming expectations of credit losses, (iv) increases comparability of purchased financial assets with credit deterioration
(PCD assets) with other purchased assets that do not have credit deterioration as well as originated assets because credit losses that
are expected will be recorded through an allowance for credit losses for all assets, (v) increases users’ understanding of underwriting
standards and credit quality trends by requiring additional information about credit quality indicators by year of origination (vintage),
and (vi) aligns the income statement recognition of credit losses, for available-for-sale debt securities, with the reporting period in
which changes occur by recording credit losses (and subsequent changes in credit losses) through an allowance rather than a write down. The new guidance affects organizations that hold financial
assets and net investments in leases that are not accounted for at fair value with changes in fair value reported in net income. It affects
loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and
any other financial assets not excluded from the scope that have the contractual right to receive cash. For public business entities that meet the definition
of a U.S. Securities and Exchange (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for
fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, it is effective
for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application is permitted. We are currently evaluating the impact of the new
guidance. Segment Reporting Accounting Standards Codification 280-10 “ Segment
Reporting An operating segment component has the following characteristics:
a. It engages in business activities from which it may recognize revenues and incur expenses (including revenues
and expenses relating to transactions with other components of the same public entity).
b. Its operating results are regularly reviewed by the public entity’s chief operating decision maker
to make decisions about resources to be allocated to the segment and assess its performance.
c. Its discrete financial information is available. The Company has three operating segments
consisting of (i) the NextMedia Division, which consists of HotPlay and Reinhart/Zappware, (ii) the NextFinTech Division, which consists
of Longroot and NextBank, and (iii) NextTrip Division, which includes NextTrip holdings. The Company’s chief operating decision
maker is considered to be the Co-Chief Executive Officers. The chief operating decision maker allocates resources and assesses performance
of the business and other activities at the single operating segment level. See Note 13 Business Segment Reporting for
details on each segment unit. |
