UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
| ☒ |
Preliminary
Proxy Statement |
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| ☐ |
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| ☐ |
Definitive
Proxy Statement |
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| ☐ |
Definitive
Additional Materials |
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| ☐ |
Soliciting
Material Pursuant to §240.14a-12 |
NextTrip,
Inc.
(Name
of Registrant as Specified in Its Charter)
N/A
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
| ☒ |
No
fee required. |
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| ☐ |
Fee
paid previously with preliminary materials. |
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| ☐ |
Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
PRELIMINARY
PROXY MATERIALS SUBJECT TO COMPLETION DATED JANUARY 24, 2025
NextTrip,
Inc.
3900
Paseo del Sol
Santa
Fe, New Mexico 87507
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held on February 27, 2025
Dear
Stockholder:
Notice
is hereby given that the 2025 Annual Meeting of Stockholders (the “Annual Meeting”) of NextTrip, Inc., a Nevada corporation
(the “Company”), will be held on Thursday, February 27, 2025, at
Mountain Time. We have adopted a virtual format for our Annual Meeting to provide a consistent and convenient experience to all stockholders
regardless of location. In order to virtually attend the Annual Meeting, you must register at
by 11:59 p.m. Eastern Time on February 26, 2025. You will not be able to attend the Annual Meeting in person. Stockholders virtually
attending the Annual Meeting will be afforded substantially the same rights and opportunities to participate as they would at an in-person
meeting. We encourage you to join us and participate online. We recommend that you log in a few minutes before
Mountain Time, on February 27, 2025 to ensure you are logged in when the Annual Meeting starts. For further information, please see
the Questions and Answers about the Annual Meeting beginning on the first page of the accompanying Proxy Statement.
At
the Annual Meeting, our stockholders will be asked to consider and vote upon the following:
| 1. | the
election of one Class I director to serve until our 2028 annual meeting of stockholders,
or until his successor is duly elected and qualified, subject to his earlier death, resignation
or removal; |
| 2. | the
ratification of the appointment of Haynie & Company as our independent registered public
accounting firm for our fiscal year ending February 28, 2025; |
| 3. | a
proposal to approve, in accordance with Nasdaq Listing Rule 5635(d), the issuance of
more than an aggregate of 19.99% of the outstanding shares of our common stock upon conversion
of outstanding shares of our Series J Nonvoting Convertible Preferred Stock, Series K Nonvoting
Convertible Preferred Stock, Series L Nonvoting Convertible Preferred Stock and Series M
Nonvoting Convertible Preferred Stock and exercise of certain warrants, all of which shares
and warrants were issued to various investors pursuant to securities purchase agreements
entered into on December 31, 2024; |
| 4. | a
proposal to approve, in accordance with Nasdaq Listing Rule 5635(c), the issuance of shares
of our common stock upon conversion of outstanding shares of our Series L Nonvoting Convertible
Preferred Stock issued to certain insiders pursuant to debt conversion agreements entered
into with such insiders on December 31, 2024; |
| 5. | a
proposal to approve, in accordance with Nasdaq Listing Rule 5635(d), the issuance of
more than an aggregate of 19.99% of the outstanding shares of our common stock pursuant to
that certain Securities Purchase Agreement, dated September 19, 2024, entered into in connection
with an equity line of credit with Alumni Capital LP; and |
| 6. | To
approve the adjournment of the Annual Meeting to another place, or a later date or dates,
if necessary or appropriate, to solicit additional proxies in the event we have not received
sufficient votes in favor of any of the foregoing proposals; and |
| 7. | To
consider and act upon any other matters which may properly come before the Annual Meeting
or any adjournment or postponement thereof. |
Our
Board of Directors (the “Board”) has carefully reviewed and considered the foregoing proposals and has concluded that each
proposal is in the best interests of the Company and its stockholders. Therefore, our Board has approved the inclusion of each proposal
and recommends that you vote “FOR” the Class I director nominee and “FOR” each of Proposals 2, 3, 4, 5 and 6.
These proposals are more fully described in the Proxy Statement accompanying this Notice. The accompanying Proxy Statement can also be
accessed directly at the following Internet address: .
Action may be taken on any one of the foregoing proposals at the Annual Meeting on the date specified above or on any date or dates
to which the meeting may be postponed or adjourned. We do not expect to transact any other business at the Annual Meeting.
Our
Board has fixed the close of business on January 22, 2025 as the record date for the determination of the stockholders entitled to notice
of, and to vote at, the Annual Meeting. Accordingly, only stockholders of record of shares of our common stock, Series H Convertible
Preferred Stock and Series I Convertible Preferred Stock at the close of business on that date will be entitled to vote at the Annual
Meeting. A list of the stockholders of record as of the close of business on January 22, 2025 will be available for inspection by any
of our stockholders for any purpose germane to the Annual Meeting during normal business hours, beginning ten days before the Annual
Meeting and through the date of the Annual Meeting. You may email us at frank.orzechowski@nexttrip.com to coordinate arrangements to
view the stockholder list.
On
or about February , 2025, we are mailing this Notice, along with the accompanying Proxy
Statement and proxy card, to each of our stockholders entitled to notice of and to vote at the Annual Meeting. Accompanying this Notice
is the Proxy Statement and a proxy card that includes voting instructions. Whether or not you expect to attend our Annual Meeting, please
read these materials carefully, complete, sign and date the enclosed proxy card and return it promptly, or complete and submit your proxy
via phone or the internet in accordance with the instructions provided on the enclosed proxy card.
We
cordially invite you to virtually attend the Annual Meeting. Your vote is important no matter how large or small your holdings in the
Company may be. If you do not expect to be present at the Annual Meeting virtually, you are urged to promptly complete, date, sign and
return the proxy card you receive or to submit your vote using another method included in the proxy card you receive in the mail. If
you hold your shares beneficially in street name through a nominee, you should follow the instructions you receive from your nominee
to vote these shares. Please review the instructions on each of your voting options described in the enclosed Proxy Statement as well
as in enclosed proxy card that you receive in the mail. This will not limit your right to virtually attend or vote at the Annual Meeting,
but will help to secure a quorum and avoid added solicitation costs. You may revoke your proxy at any time before it has been voted at
the Annual Meeting.
Even
if you plan to attend the virtual Annual Meeting, we request that you submit a proxy by following the instructions provided in the enclosed
proxy card you receive in the mail as soon as possible in order to ensure that your shares will be represented at the Annual Meeting
if you are unable to attend.
Thank
you for your participation. We look forward to your continued support.
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By
Order of the Board of Directors, |
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|
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NextTrip,
Inc. |
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|
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William
Kerby |
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Chief
Executive Officer |
Santa
Fe, New Mexico
February
, 2025
IMPORTANT:
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE ASK YOU TO VOTE BY TELEPHONE, MAIL, FAX OR ON THE INTERNET USING THE INSTRUCTIONS
PROVIDED IN THE NOTICE.
TABLE
OF CONTENTS
PRELIMINARY
PROXY MATERIALS SUBJECT TO COMPLETION DATED JANUARY 24, 2025
NextTrip,
Inc.
3900
Paseo del Sol
Santa
Fe, New Mexico 87507
PROXY
STATEMENT
FOR
THE 2025 ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON FEBRUARY 27, 2025
This
proxy statement (the “Proxy Statement”) is furnished in connection with the solicitation of proxies by the board of directors
(the “Board”) of NextTrip, Inc., a Nevada corporation (the “Company,” “NextTrip,” “we”
or “us”), for use at the 2025 Annual Meeting of Stockholders of the Company (the “Annual Meeting”), to be held
on Thursday, February 27, 2005, at Mountain Time.
We have adopted a virtual format for our Annual Meeting to provide a consistent and convenient experience to all stockholders regardless
of location. In order to virtually attend the Annual Meeting, you must register at
by 11:59 p.m. Eastern Time on February 26, 2025. You will not be able to attend the Annual Meeting in person. Stockholders virtually
attending the Annual Meeting will be afforded substantially the same rights and opportunities to participate as they would at an in-person
meeting. We encourage you to join us and participate online. We recommend that you log in a few minutes before
Mountain Time, on February 27, 2025 to ensure you are logged in when the Annual Meeting starts. For further information, please see
the Questions and Answers about the Annual Meeting beginning on the second page of this Proxy Statement.
On
or about February , 2025, we are mailing this Proxy Statement, the accompanying proxy
card and our Annual Report on Form 10-K for our fiscal year ended February 29, 2024 (the “Annual Report”) to each of our
stockholders entitled to notice of and to vote at the Annual Meeting. The enclosed proxy card includes instructions for how you may vote
your shares at the Annual Meeting.
Only
stockholders of record at the close of business on January 22, 2025 (the “Record Date”) are entitled to notice of, and to
vote at, the Annual Meeting. Accordingly, only stockholders of record of shares of our common stock, Series H Convertible Preferred Stock
(“Series H Preferred”) and Series I Convertible Preferred Stock (“Series I Preferred”) at the close of business
on that date will be entitled to vote at the Annual Meeting. Shares cannot be voted at the Annual Meeting unless the holder thereof is
present or represented by proxy.
The
information provided in the “question and answer” format below is for your convenience only and is merely a summary of the
information contained in this Proxy Statement. You should read this entire Proxy Statement carefully. Information contained on, or that
can be accessed through, our website is not intended to be incorporated by reference into this Proxy Statement and references to our
website address in this Proxy Statement are inactive textual references only.
QUESTIONS
AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
| Q: |
Why
am I receiving this proxy statement? |
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|
| A: |
The
Board is soliciting your proxy to vote at the Annual Meeting because you owned shares of
Company common stock, Series H Preferred and/or Series I Preferred, as applicable, at the
close of business on the Record Date and are therefore entitled to vote at the Annual Meeting.
This Proxy Statement summarizes the information that you need to know in order to cast your
vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your securities
of NextTrip.
Under
rules adopted by the SEC, we have mailed the full set of our proxy materials, including this Proxy Statement, the accompanying proxy
card and our Annual Report, to our stockholders of record as of the Record Date. The proxy materials are also available to view and
download at . |
| Q: |
When
and how will the Annual Meeting be held? |
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|
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The
Annual Meeting will be held virtually at
Mountain Time on February 27, 2025. In order to attend the meeting, you must register
at
by 11:59 p.m. Eastern Time on February 26, 2025. You will not be able to attend the Annual
Meeting in person.
|
| Q: |
How
do I attend and participate in the Annual Meeting online?
|
| A: |
The
Annual Meeting will be a completely virtual meeting of stockholders and will be webcast live
over the Internet. Any stockholder can attend the virtual meeting live by registering at
.
The webcast will start at
Mountain Time. Stockholders as of the Record Date may vote and submit questions while
attending the Annual Meeting online. Stockholders attending the Annual Meeting online will
be afforded substantially the same rights and opportunities to participate as they would
at an in-person meeting.
To
enter the Annual Meeting, you will need the control number, which is included in your proxy materials if were are a stockholder of
record of shares of our common stock, Series H Preferred or Series I Preferred, as applicable, as of the Record Date, or included
with your voting instructions and materials received from your broker, bank or other agent if you hold your shares in a “street
name.” Instructions on how to attend and participate are available at .
We recommend that you log in a few minutes before
Mountain Time to ensure you are logged in when the Annual Meeting starts. The webcast will open 15 minutes before the start of
the Annual Meeting.
If
you would like to submit a question during the Annual Meeting, you may log in to the virtual meeting using your control number, type
your question into the “Ask a Question” field, and click “Submit.” |
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|
| Q: |
Will
a list of record stockholders as of the Record Date be available? |
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| A: |
For
the ten days prior to the Annual Meeting, the list of stockholders of record on the Record Date will be available for examination
by any stockholder of record for a legally valid purpose by request. You can contact our Chief Financial Officer and Secretary, Frank
Orzechowski, at (954) 526-9688 or at frank.orzechowski@nexttrip.com to coordinate arrangements to view the stockholder list. |
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| Q: |
On
what matters will I be voting? |
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| A: |
The
following chart sets forth the proposals scheduled for a vote at the Annual Meeting, the vote required for such proposals to be approved,
the voting options and the Board’s recommendations with respect to each proposal: |
| Proposal |
|
Votes
Required |
|
Voting
Options |
|
Board
Recommendation |
| Proposal
1: To elect one Class I director to serve until our 2028 annual meeting of stockholders, or until his successor is duly elected
and qualified, subject to his earlier death, resignation or removal. |
|
The
Class I director nominee receiving the highest number of “FOR” votes cast will
be elected to our Board.
Abstentions
and broker non-votes will have no effect on the outcome of this proposal. |
|
“FOR”
or “AGAINST” or “ABSTAIN” |
|
“FOR” |
| |
|
|
|
| Proposal
2: To ratify the appointment of Haynie & Company as our independent registered public accounting firm for our fiscal
year ending February 28, 2025. |
|
The
number of votes cast “FOR” this proposal must exceed the number of votes cast
“AGAINST” this proposal.
This
proposal is considered a routine matter on which brokers can vote in their discretion; accordingly, we do not expect to receive any
broker non-votes on the proposal. However, to the extent that any broker non-votes are received, broker non-votes will have no effect
on the outcome of the vote on this proposal. Abstentions will have no effect on the outcome of the vote on this proposal. |
|
“FOR”
or “AGAINST” or “ABSTAIN” |
|
“FOR” |
| |
|
|
|
|
|
|
| Proposal
3: To approve, in accordance with Nasdaq Listing Rule 5635(d), the issuance of more than an aggregate of 19.99% of the outstanding
shares of our common stock upon conversion of outstanding shares of our Series J Nonvoting Convertible Preferred Stock, Series K
Nonvoting Convertible Preferred Stock, Series L Nonvoting Convertible Preferred Stock and Series M Nonvoting Convertible Preferred
Stock and exercise of certain warrants, all of which shares and warrants were issued to various investors pursuant to securities
purchase agreements entered into on December 31, 2024. |
|
The
number of votes cast “FOR” this proposal must exceed the number of votes cast
“AGAINST” this proposal.
Abstentions
and broker non-votes will have no effect on the outcome of this proposal.
|
|
“FOR”
or “AGAINST” or “ABSTAIN” |
|
“FOR” |
| |
|
|
|
|
|
|
| Proposal
4: To approve, in accordance with Nasdaq Listing Rule 5635(c), the issuance of shares of our common stock upon conversion of
outstanding shares of our Series L Nonvoting Convertible Preferred Stock issued to certain insiders pursuant to debt conversion agreements
entered into with such insiders on December 31, 2024. |
|
The
number of votes cast “FOR” this proposal must exceed the number of votes cast
“AGAINST” this proposal.
Abstentions
and broker non-votes will have no effect on the outcome of this proposal. |
|
“FOR”
or “AGAINST” or “ABSTAIN” |
|
“FOR” |
| |
|
|
|
|
|
|
| Proposal
5: To approve, in accordance with Nasdaq Listing Rule 5635(d), the issuance of more than an aggregate of 19.99% of
the outstanding shares of our common stock pursuant to that certain Securities Purchase Agreement, dated September 19, 2024, entered
into in connection with an equity line of credit with Alumni Capital LP. |
|
The
number of votes cast “FOR” this proposal must exceed the number of votes cast
“AGAINST” this proposal.
Abstentions
and broker non-votes will have no effect on the outcome of this proposal. |
|
“FOR”
or “AGAINST” or “ABSTAIN” |
|
“FOR” |
| |
|
|
|
|
|
|
| Proposal
6: To approve the adjournment of the Annual Meeting to another place, or a later date or dates, if necessary or appropriate,
to solicit additional proxies in the event we have not received sufficient votes in favor of any of the foregoing proposals. |
|
The
number of votes cast “FOR” this proposal must exceed the number of votes cast
“AGAINST” this proposal.
This
proposal is considered a routine matter on which brokers can vote in their discretion; accordingly, we do not expect to receive any
broker non-votes on the proposal. However, to the extent that any broker non-votes are received, broker non-votes will have no effect
on the outcome of the vote on this proposal. Abstentions will have no effect on the outcome of the vote on this proposal. |
|
“FOR”
or “AGAINST” or “ABSTAIN” |
|
“FOR” |
| Q: |
What
happens if I sell my shares after the Record Date, but before the Annual Meeting? |
| |
|
| A: |
If
you sell or transfer your shares of the Company after the Record Date but before the Annual Meeting, you will retain your right to
vote at the Annual Meeting, but will transfer ownership of the shares and will not hold an interest in the Company. |
| |
|
| Q: |
How
do I vote? |
| |
|
| A: |
After
you have carefully read this proxy statement and have decided how you wish to vote your shares
of NextTrip common stock, Series H Preferred and/or Series I Preferred, as applicable, please
vote promptly.
Stockholders
of Record and Voting
If
your shares of Company stock are registered directly in your name with the Company or the Company’s transfer agent, Issuer
Direct Corporation, as applicable, you are the stockholder of record of those shares and these proxy materials have been mailed or
e-mailed to you by the Company. You may vote your shares by Internet, telephone, fax or by mail, as further described below. Your
vote authorizes William Kerby, Chief Executive Officer of the Company, as your proxy, with the power to appoint his substitute, to
represent and vote your shares as you direct. |
| |
● |
To
vote online during the Annual Meeting, follow the provided instructions to join the meeting at ,
starting at Mountain
Time on February 27, 2025. The webcast will open 15 minutes before the start of the Annual Meeting. |
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|
|
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● |
To
vote in advance of the Annual Meeting through the internet, go to
to complete an electronic proxy card. You will be asked to provide the company number and control number from the printed proxy
card. Your internet vote must be received by 11:59 p.m. Eastern Time on February 26, 2025 to be counted. |
| |
|
|
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● |
To
vote in advance of the Annual Meeting by telephone, dial [1-866-752-8683] and follow the recorded instructions. You will be asked
to provide the company number and control number from the printed proxy card. Your telephone vote must be received by 11:59 p.m.
Eastern Time on February 26, 2025 to be counted. |
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|
|
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● |
To
vote by fax, complete, sign and date the enclosed proxy card and fax it to .
Your vote by fax must be received by 11:59 p.m. Eastern Time on February 26, 2025 to be counted. If no directions are given,
the proxy will vote your shares in accordance with our Board’s recommendations. |
| |
|
|
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● |
To
vote using the enclosed proxy card, complete, sign and date the enclosed proxy card and return it promptly in the accompanying postage-paid
envelope. If you return your signed proxy card to us before the Annual Meeting, the proxy will vote your shares as you direct. If
no directions are given, the proxy will vote your shares in accordance with our Board’s recommendations. |
| |
Beneficial
Owners
If
your shares of Company stock are held in a stock brokerage account, by a bank, broker or other nominee, you are considered the beneficial
owner of shares held in street name and these proxy materials are being forwarded to you by your bank, broker or nominee that is
considered the holder of record of those shares. As the beneficial owner, you have the right to direct your bank, broker, trustee
or nominee on how to vote your shares via the Internet or by telephone or fax if the bank, broker, trustee or nominee offers these
options. You can also sign and return a proxy card. Your bank, broker, trustee or nominee will send you instructions for voting your
shares. Please note that you may not vote shares held in street name by returning a proxy card directly to the Company or by voting
at the Annual Meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or nominee. Furthermore,
brokers, banks and nominees who hold shares of Company stock on your behalf may not give a proxy to the Company to vote those shares
on non-discretionary matters without specific instructions from you.
For
a discussion of the rules regarding the voting of shares held by beneficial owners, please see the question below entitled “If
I am a beneficial owner of shares of Company stock, what happens if I do not provide voting instructions?” |
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|
| Q: |
How
many shares must be present to hold the Annual Meeting? |
| |
|
| A: |
The
presence in person or by proxy of at least one-third of the voting power of the outstanding shares of Company stock, including its
common stock, Series H Preferred and Series I Preferred, outstanding as of the Record Date, is necessary to constitute a quorum at
the Annual Meeting. The inspector of election will determine whether a quorum is present. If you are a beneficial owner (as defined
above) of shares of the Company’s stock and you do not instruct your bank, broker or other nominee how to vote your shares
on any of the proposals, your shares will nonetheless be counted as present at the Annual Meeting for purposes of determining whether
a quorum exists so long as they are voted by such bank, broker or other nominee on one of the discretionary proposals. Stockholders
of record who are present at the Annual Meeting in person or by proxy will be counted as present at the Annual Meeting for purposes
of determining whether a quorum exists even if such stockholders abstain from voting. |
| |
|
| Q: |
How
many votes do I and others have? |
| |
|
| A: |
You
are entitled to one vote for each share of Company common stock, Series H Preferred and Series
I Preferred, as applicable, that you held as of the Record Date. Holders of Series H Preferred
and Series I Preferred will vote together with holders of Company common stock as a single
class on each of the proposals being presented to stockholders for approval at the Annual
Meeting.
Notwithstanding
the foregoing, of the shares of our stock entitled to vote, 32,786 of the shares of our common stock were issued to Alumni Capital
as Initial Commitment Shares in connection with the Alumni Purchase Agreement (as described in Proposal 5) and are not entitled to
vote on Proposal 5 for purposes of the listing rules of the Nasdaq Stock Market. Accordingly, although we anticipate that 32,786
shares of common stock will be voted in favor of Proposal 5 for purposes of adopting the respective proposals under Nevada law, to
comply with Nasdaq rules, we will instruct the inspector of elections to conduct a separate tabulation that subtracts 32,786 shares
from the total number of shares voted in favor of Proposal 5 to determine whether the proposal has been adopted in accordance with
applicable Nasdaq rules.
As
of the close of business on the Record Date, there were 1,592,738 shares of Company common stock outstanding, 33,000 shares of Series
H Preferred outstanding, and 126,204 shares of Series I Preferred outstanding.
On
the Record Date, there were also 316 shares of the Series E Preferred Stock (“Series E Preferred”) outstanding, 297,788
shares of Series J Nonvoting Convertible Preferred Stock (“Series J Preferred”) outstanding, 60,595 shares of Series
K Nonvoting Convertible Preferred Stock (“Series K Preferred”) outstanding, 579,469 shares of Series L Nonvoting Convertible
Preferred Stock (“Series L Preferred”) outstanding, and 133,278 shares of Series M Nonvoting Convertible Preferred Stock
(“Series M Preferred”) outstanding. However, shares of the Series E, J, K, L and M Preferred are not entitled to vote
on the matters being considered at the Annual Meeting. |
| Q: |
If
I am a beneficial owner of shares of Company stock, what happens if I do not provide voting instructions? What is discretionary voting?
What is a broker non-vote? |
| |
|
| A: |
If
you are a beneficial owner and you do not provide voting instructions to your broker, bank
or other holder of record holding shares for you, your shares will not be voted with respect
to any proposal for which your broker does not have discretionary authority to vote. Even
though the Company’s common stock is listed on Nasdaq, the rules of the New York Stock
Exchange determine whether proposals presented at stockholder meetings are “discretionary”
or “non-discretionary.” If a proposal is determined to be discretionary, your
broker, bank or other holder of record is permitted under New York Stock Exchange rules to
vote on the proposal without receiving voting instructions from you. If a proposal is determined
to be non-discretionary, your broker, bank or other holder of record is not permitted under
New York Stock Exchange rules to vote on the proposal without receiving voting instructions
from you. A “broker non-vote” occurs when a bank, broker or other holder of record
holding shares for a beneficial owner does not vote on a non-discretionary proposal because
the holder of record has not received voting instructions from the beneficial owner.
We
are advised that the Proposals 2 and 6 are discretionary proposals. Proposals 1, 3, 4 and 5 are non-discretionary proposals. Accordingly,
if you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record holding shares
for you, your shares may not be voted with respect to Proposals 1, 3, 4 and 5. Broker non-votes will have no effect on the outcome
of any of the proposals being presented to stockholders for approval at the Annual Meeting. |
| |
|
| Q: |
What
will happen if I return my proxy card without indicating how to vote? |
| |
|
| A: |
If
you sign and return your proxy card without indicating how to vote on one or more of the proposals, the Company stock represented
by your proxy will be voted in favor of each such proposal. Proxy cards that are returned without a signature will not be counted
as present at the Annual Meeting and cannot be voted. |
| |
|
| Q: |
Can
I change my vote after I have returned a proxy or voting instruction card? |
| |
|
| A: |
Yes.
You can change your vote at any time before your proxy is voted at the Annual Meeting. You can do this in one of four ways: |
| |
● |
you
can grant a new, valid proxy bearing a later date; |
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|
|
| |
● |
you
can send a signed notice of revocation; |
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|
|
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● |
if
you are a holder of record, you can attend the Annual Meeting and vote at the Annual Meeting, which will automatically cancel any
proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have
previously given; or |
| |
|
|
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● |
if
your shares of Company stock are held in an account with a broker, bank or other nominee, you must follow the instructions on the
voting instruction card you received in order to change or revoke your instructions. |
| |
If
you choose either of the first two methods, you must submit your written notice of revocation or your new proxy to the Secretary
of the Company, as specified below under “What is the deadline to propose actions for consideration at this year’s
annual meeting of stockholders or to nominate individuals to serve as directors?” no later than the beginning of the
Annual Meeting. If your shares are held in street name by your broker, bank or nominee, you should contact them to change your vote. |
| |
|
| Q: |
Do
I need identification to attend the Annual Meeting? |
| |
|
| A: |
Yes.
You will be asked to provide the company number and control number from the printed proxy card. |
| |
|
| Q: |
Are
Company stockholders entitled to dissenters’ or appraisal rights? |
| |
|
| A: |
No.
Company stockholders do not have dissenters’ or appraisal rights in connection with any of the proposals under Chapter 78 of
Nevada Revised Statutes (the “NRS”) and will not be afforded any such rights. |
| Q: |
What
do I do if I receive more than one set of voting materials? |
| |
|
| A: |
You
may receive more than one set of voting materials for the Annual Meeting, including multiple copies of this Proxy Statement, proxy
card, Annual Report and/or voting instruction form. This can occur if you hold your shares of Company stock in more than one brokerage
account, if you hold shares of Company stock directly as a record holder and also in street name, or otherwise through a nominee.
Other circumstances may apply. If you receive more than one set of voting materials, each should be voted and/or returned separately
in order to ensure that all of your shares of common stock, Series H Preferred and/or Series I Preferred, as applicable, are voted. |
| |
|
| Q: |
How
can I find out the results of the voting at the Annual Meeting? |
| |
|
A:
|
Preliminary
voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a Current Report on
Form 8-K that we intend to file with the Securities and Exchange Commission (“SEC”) within four business days after the
Annual Meeting. |
| |
|
| Q: |
What
proxy materials are available on the internet? |
| |
|
| A: |
This
proxy statement is available at . |
| |
|
| Q: |
Whom
may I call with questions about the Annual Meeting and the Proposals? |
| |
|
| A: |
Company
stockholders should contact our Chief Financial Officer and Secretary, Frank Orzechowski, via email at frank.orzechowski@nexttrip.com
or by telephone at (954) 526-9688 with any questions regarding the Annual Meeting or any of the proposals to be presented at the
Annual Meeting. |
| |
|
| Q: |
What
is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals
to serve as directors? |
| |
|
| A: |
Stockholders
may present proper proposals for inclusion in our proxy statement and for consideration at
the next annual meeting of stockholders by submitting their proposals in writing to our Corporate
Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in
our proxy statement for our 2026 annual meeting of stockholders, our Corporate Secretary
must receive the written proposal at our principal executive offices not later than ,
2026, which is 120 days prior to the first anniversary of the mailing date of this Proxy
Statement for our 2025 annual meeting of stockholders. In addition, stockholder proposals
must comply with the requirements of Rule 14a-8 regarding the inclusion of stockholder proposals
in company-sponsored proxy materials. Stockholder proposals should be addressed to:
NextTrip,
Inc.
Attention:
Corporate Secretary
3900
Paseo del Sol
Santa
Fe, New Mexico 87507
As
for stockholders who wish to present a proposal or to nominate a director candidate at the 2026 annual meeting of stockholders, but
not to include the proposal or nomination in our proxy statement, our amended and restated bylaws state that the proposal or nomination
must be received by us no later than ,
2026, which is 120 days prior to the first anniversary of the mailing date of this Proxy statement. The proposal or nomination must
also contain the information required by our amended and restated bylaws. A proposal or nomination to be presented directly at the
2026 annual meeting should be addressed to us as set forth above. For the 2026 annual meeting, we will be required pursuant to Rule
14a-19 under the Securities Exchange Act of 1934, as amended, to include on our proxy card all nominees for director for whom we
have received notice under the rule, which must be received no later than 60 calendar days prior to the anniversary of our 2025 annual
Meeting. For any such director nominee to be included on our proxy card for this year’s annual meeting, notice must have been
be received no later than October 28, 2024. |
PROPOSAL
1
ELECTION
OF DIRECTORS
Background
Our
Board is currently composed of five members. In accordance with our amended and restated bylaws, our Board is divided into three staggered
classes of directors, with each class having a three-year term. Vacancies on the Board and newly created directorships may be filled
only by the affirmative vote of a majority of the remaining directors then in office, although less than a quorum, or by a sole remaining
director. A director elected by the Board to fill a vacancy (including a vacancy created by an increase in the number of directors) shall
serve for the remainder of the full term of the class of directors in which the vacancy occurred and until the director’s successor
is elected and has duly qualified, or until such director’s earlier death, resignation or removal. Any increase or decrease in
the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third
of our directors.
Currently,
our directors are divided among the three classes as follows:
| ● | the
Class I director is Donald P. Monaco, and his current term will expire at the Annual Meeting;
|
| ● | the
Class II directors are Salvatore Battinelli and Jacob Brunsberg, and their current terms
will expire at our 2026 annual meeting of stockholders; and |
| ● | the
Class III directors are Dennis Duitch and Kent Summers, and their current terms will expire
at our 2027 annual meeting of stockholders. |
The
Nominations and Corporate Governance Committee of our Board has recommended, and our Board has nominated, Donald P. Monaco for re-election
as our Class I director at the Annual Meeting for a period of three years, or until his successor is elected and qualified, subject to
his earlier death, resignation or removal. At such the Annual Meeting, only one Class I director will be elected to our Board.
Information
Regarding our Class I Director
The
below table and narrative disclosures include information about our Class I director nominee.
| Name |
|
Age |
|
Position |
| Donald
P. Monaco |
|
72 |
|
Chair
of the Board, Class I Director |
Donald
P. Monaco has served as Chairman of the Board since December 29, 2023. Mr. Monaco has approximately three decades of experience
as an international information technology and business management consultant. Mr. Monaco is the founder and owner of Monaco Air Duluth,
LLC, a full service, fixed-base operator aviation services business at Duluth International Airport in Duluth, Minnesota, serving airline,
military, and general aviation customers since November 2005. Since January 2009, he has been appointed and reappointed by Minnesota
Governors to serve as a Commissioner of the Metropolitan Airports Commission in Minneapolis-St. Paul, Minnesota, and currently serves
as Chairman of the Operations, Finance and Administration Committee. Mr. Monaco is also the President and Chairman of the Monaco Air
Foundation, Treasurer of Honor Flight Northland, Treasurer of the Duluth Aviation Institute, and a member of the Duluth Chamber of Commerce
Military Affairs Committee. Mr. Monaco previously worked as an international information technology and business management consultant
with Accenture in Chicago, Illinois for 28 years, and as a partner and senior executive for 18 of such years. From August 2011 to January
2023, Mr. Monaco served as a member of the board of directors of NextPlay (known as Monaker prior to June 2020), where he served as chairman
of the board of directors from August 2018 to June 2021 and as co-chairman of the board from June 2021 to December 2021. He previously
served as a director at Republic Bank in Duluth, Minnesota from May 2015 until October 2019. He also served on the Verus International,
Inc., formerly RealBiz Media Group, Inc., board of directors from October 2012 until April 2016, serving as chairman of the board from
August 2015 to April 2016. Mr. Monaco holds Bachelor’s and Master’s degrees in Computer Science Engineering from Northwestern
University.
Our
Board believes that Mr. Monaco is qualified to serve as a member of our Board on the basis of his deep understanding of information technology,
early-stage business growth strategies and business acquisitions, as well as his background and extensive company management and leadership
experience.
Considerations
in Evaluating Director Nominees
Our
Nominating and Corporate Governance Committee uses a variety of methods for identifying and evaluating director nominees. In its evaluation
of director candidates, our Nominating and Corporate Governance Committee will consider the current size and composition of our Board
and the needs of our Board and the respective committees of our Board. Some of the qualifications that our Nominating and Corporate Governance
Committee considers include, without limitation, issues of character, integrity, judgment, diversity of experience, independence, area
of expertise, corporate experience, length of service, potential conflicts of interest and other commitments. Nominees must also have
the ability to offer advice and guidance to our Chief Executive Officer based on past experience in positions with a high degree of responsibility
and be leaders in the companies or institutions with which they are affiliated. Director candidates must have sufficient time available
in the judgment of our Nominating and Corporate Governance Committee to perform all board of director and committee responsibilities.
Members of our Board are expected to prepare for, attend, and participate in all Board and applicable committee meetings. Other than
the foregoing, there are no stated minimum criteria for director nominees, although our Nominating and Corporate Governance Committee
may also consider such other factors as it may deem, from time to time, are in our and our stockholders’ best interests.
Although
our Board does not maintain a specific policy with respect to board diversity, our Board believes that our Board should be a diverse
body, and our Nominating and Corporate Governance Committee considers a broad range of backgrounds and experiences. In making determinations
regarding nominations of directors, our Nominating and Corporate Governance Committee may take into account the benefits of diverse viewpoints.
Our Nominating and Corporate Governance Committee also will consider these and other factors as it oversees the annual Board and committee
evaluations. After completing its review and evaluation of director candidates, our Nominating and Corporate Governance Committee recommends
to our full Board the director nominees for selection.
Nominating
and Corporate Governance Committee is committed to ensuring that our Board’s composition appropriately reflects the current and
anticipated needs of our Board and the Company and believes that our current directors are well-suited to serve as directors based on
the expertise and experience.
Stockholder
Recommendations for Nominations to the Board
Our
Nominating and Corporate Governance Committee will consider candidates for director recommended by stockholders so long as such recommending
stockholder was a stockholder of record both at the time of giving notice and at the time of the annual meeting, and such recommendations
comply with our amended and restated articles of incorporation, amended and restated bylaws and applicable laws, rules and regulations,
including those promulgated by the SEC. The Nominating and Corporate Governance Committee will evaluate such recommendations in accordance
with its charter, our amended and restated bylaws, our policies and procedures for director candidates, as well as the regular director
nominee criteria described above. This process is designed to ensure that our Board of Directors includes members with suitable backgrounds,
skills and experience, including appropriate financial and other expertise relevant to our business. Eligible stockholders wishing to
recommend a candidate for nomination should contact the Secretary in writing. Our Nominating and Corporate Governance Committee has the
discretion to decide which individuals to recommend for nomination as directors.
Any
nomination should be sent in writing to our Corporate Secretary at NextTrip, Inc., 3900 Paseo del Sol, Santa Fe, New Mexico 87507. To
be timely for our 2026 annual meeting of stockholders, our Corporate Secretary must receive the nomination by ,
2026, the date 120 days prior to the first anniversary of the mailing date of this Proxy Statement. For the 2026 annual meeting,
we will be required, pursuant to Rule 14a-19 under the Exchange Act, to include on our proxy card all nominees for director for whom
we have received notice under the rule, which must be received no later than 60 calendar days prior to the anniversary of the Annual
Meeting. For any such director nominee to be included on our proxy card for next year’s annual meeting, notice must be received
no later than October 28, 2024.
Vote
Required
The
Class I director nominee receiving the highest number of “FOR” votes cast will be elected to our Board. Broker non-votes
and abstentions will have no effect on the outcome of this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A
VOTE “FOR” THE ELECTION OF THE
CLASS
I DIRECTOR NOMINEE UNDER PROPOSAL 1
PROPOSAL
2
RATIFICATION
OF SELECTION OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Background
Our
Audit Committee has selected Haynie & Company (“Haynie”) as our independent registered public accounting firm for the
fiscal year ending February 28, 2025, and has further directed that we submit the selection of the independent registered accounting
firm for ratification by our stockholders at the Annual Meeting. Haynie has audited the Company’s financial statements since February
15, 2024. Representatives of Haynie are not expected to be present at the Annual Meeting.
TPS
Thayer, LLC (“TPS”) was originally engaged by NextTrip Group, LLC (“NextTrip Group”), the former parent of the
Company’s wholly-owned subsidiary NextTrip Holdings, Inc. (“NextTrip”), which became the accounting predecessor of
the Company upon consummation of the business combination between NextTrip and the Company on December 29, 2023 (the “Business
Combination”), to serve as NextTrip Group’s auditor for its fiscal years ended February 28, 2023.
Neither
our governing documents nor any applicable laws require stockholder ratification of the selection of Haynie as our independent registered
public accounting firm. However, our Audit Committee is submitting the selection of Haynie to our stockholders for ratification as a
matter of good corporate practice. If our stockholders do not ratify this selection, the Audit Committee will reconsider its selection
of Haynie and will either continue to retain the firm or appoint a new independent registered public accounting firm. Even if the selection
is ratified, the Audit Committee may, in its sole discretion, determine to appoint a different independent registered public accounting
firm at any time during the year if it determines that such a change would be in our and our stockholders’ best interests.
Independent
Registered Public Accounting Firm Fee Information
The
following table sets forth the aggregate fees billed by Haynie, the Company’s
current auditor, for professional services rendered with respect to the fiscal years ended February 29, 2024 and February 28, 2023, as
applicable.
| | |
February 29, 2024 | | |
February 28, 2023 | |
| Audit fees(1)(3) | |
$ | 78,000 | | |
$ | 45,000 | |
| Audit related fees(2)(3) | |
| - | | |
| - | |
| Tax fees | |
| 750 | | |
| — | |
| All other fees | |
| 12,500 | | |
| — | |
| Total | |
$ | 91,250 | | |
$ | 45,000 | |
| (1) | In
accordance with the SEC’s definitions and rules, “audit fees” are fees
that we paid for professional services for the audit of our financial statements included
in our Annual Report on Form 10-K and review of the interim financial statements included
in quarterly reports, and for services that are normally provided by the registered public
accounting firm in connection with statutory and regulatory filings or engagements. |
| | | |
| (2) | In
accordance with the SEC’s definitions and rules, “audit-related fees” are
fees for assurance and related services that are reasonably related to the performance of
the audit or review of our financial statements; and “tax fees” are fees for
tax compliance, tax advice and tax planning. |
| | | |
| | (3) | In
addition to the amounts included in the table above, the Company paid TPS, it’s predecessor
auditor, $44,000 in audit fees for the February 29, 2024 audit, and $80,000 in audit and
audit related fees for the February 28, 2023 audit. |
Audit
Committee Pre-Approval Policies and Procedures
The
Audit Committee’s pre-approval policies and procedures and other protocols are discussed in its written charter, which can be found
at www.nexttrip.com under the tab “Investors.” Before our independent registered public accounting firm is engaged by the
Company to render audit or non-audit services, the Audit Committee must pre-approve the engagement. Audit Committee pre-approval of audit
and non-audit services are not required if the engagement for the services is entered into pursuant to pre-approval policies and procedures
established by the Audit Committee regarding the Company’s engagement of the independent registered public accounting firm, provided
the policies and procedures are detailed as to the particular service, the Audit Committee is informed of each service provided and such
policies and procedures do not include delegation of the Audit Committee’s responsibilities under the Exchange Act to the Company’s
management. The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant pre-approvals.
If the Audit Committee elects to establish pre-approval policies and procedures regarding non-audit services, the Audit Committee must
be informed of each non-audit service provided by the independent registered public accounting firm. Audit Committee pre-approval of
non-audit services (other than review and attestation services) also will not be required if such services fall within available exceptions
established by the SEC. The Audit Committee may not engage the independent registered public accounting firm to perform non-audit services
prohibited by law or regulation. On an annual basis, our management reports to the Audit Committee all audit services performed during
the previous 12 months and all fees billed by our independent registered public accounting firm for such services.
Auditor
Independence
In
our fiscal year ended February 29, 2024, Haynie provided no professional services that would require our Audit Committee to consider
their compatibility with maintaining the independence of Haynie.
Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure
TPS
served as the independent registered accounting firm NextTrip Group, which became the accounting predecessor of the Company upon consummation
of the Business Combination, for its fiscal year ended February 28, 2023. Subsequent to closing of the Business Combination,
on February 15, 2024, the Company notified TPS of its dismissal as the Company’s independent registered
public accounting firm, effective as of that date. The dismissal of TPS was approved by both our Audit Committee and the Board.
The
report of TPS regarding the Company’s financial statements for the fiscal year ended February 28, 2023 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope, or accounting principles, except that TPS’ report contained an explanatory paragraph expressing substantial doubt
about the ability of NextTrip Group to continue as a going concern. During the NextTrip Group’s fiscal year ended February
28, 2023, and the subsequent interim period through the date of TPS’ dismissal, there were (i) no “disagreements,”
as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, with TPS on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, any of which, if not resolved to TPS’ satisfaction, would have caused it
to make reference to the subject matter of any such disagreement in connection with its reports for such fiscal years and (ii) no “reportable
events,” as that term is defined in Item 304(a)(1)(v) of Regulation S-K, during the fiscal year ended February 28, 2023
requiring disclosure pursuant to paragraph (a)(1)(v) of Item 304 of Regulation S-K and the related instructions to Item 304 of Regulation
S-K.
On
February 15, 2024, the Company engaged Haynie as the Company’s independent registered public accounting firm, effective as of that
date. The Board, upon recommendation of the Audit Committee, approved the decision to engage Haynie and appointed Haynie as the Company’s
independent registered public accounting firm for the fiscal year ending February 29, 2024.
Haynie
served as the Company’s independent registered public accounting firm prior to consummation of the Business Combination. During
the fiscal year ended February 28, 2023, and the subsequent interim period through February 15, 2024, neither NextTrip Group
nor anyone acting on its behalf, consulted with Haynie regarding (i) the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be rendered on NextTrip Group’s financial statements, and
neither a written report nor oral advice was provided to the NextTrip Group that Haynie concluded was an important factor considered
by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, (ii) any matter that was the subject
of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K, or (iii) any reportable event within the meaning of Item
304(a)(1)(v) of Regulation S-K.
The
Company disclosed the change in auditors in a Current Report on Form 8-K filed with the SEC on February 22, 2024.
Vote
Required
This
proposal will be approved if the number of votes cast “FOR” the ratification of the selection of Haynie as our independent
registered public accounting firm for the fiscal year ended February 28, 2025 exceeds the number of votes cast “AGAINST”
the proposal. This proposal is considered a routine matter on which brokers can vote in their discretion; accordingly, we do not expect
to receive any broker non-votes on the proposal. However, to the extent that any broker non-votes are received, broker non-votes will
have no effect on the outcome of the vote on this proposal. Abstentions will have no effect on the outcome of the vote on this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A
VOTE “FOR” THE RATIFICATION OF THE SELECTION OF
HAYNIE
& COMPANY AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING FEBRUARY 28, 2025
PROPOSAL
3
APPROVAL
OF THE ISSUANCE OF MORE THAN 19.99% OF OUR COMMON STOCK UPON CONVERSION OF SERIES J, K, L AND M PREFERRED STOCK AND EXERCISE OF WARRANTS,
IN ACCORDANCE WITH NASDAQ LISTING RULE 5635(D)
General
We
are asking stockholders to approve the issuance of more than 19.99% of our outstanding shares of our common stock issuable upon the conversion
of the outstanding shares of our Series J Preferred, Series K Preferred, Series L Preferred and Series M Preferred (collectively, the
“Preferred Stock”) and the exercise of certain warrants, all of which shares and warrants were issued to various investors
pursuant to securities purchase agreements entered into on December 31, 2024.
On
the Record Date, there were 297,788 shares of Series J Preferred outstanding, 60,595 shares of Series K Preferred outstanding, 579,469
shares of Series L Preferred outstanding, and 133,278 shares of Series M Preferred outstanding. Shares of the Series J, K, L and M Preferred
are not entitled to vote on the matters being considered at the Annual Meeting.
Description
of the Preferred Offerings
Each
of the transactions discussed below include conversion or exercise limitations which provide that the Company shall not issue or sell
any shares of its common stock pursuant to the conversions of shares of the Preferred Stock or exercises of warrants issued in connection
with such offerings to the extent that after giving effect thereto, the aggregate number of shares of our common stock that would be
issued pursuant to such conversions and exercises would exceed 19.99% of the shares of our common stock outstanding on the date of each
such offering (which number of shares shall be reduced, on a share-for-share basis, by the number of shares of common stock issued or
issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by each such
separate offering under applicable rules of the Nasdaq Capital Market) (the “Exchange Cap”) unless and until the Company
obtains stockholder approval of such issuances in accordance with the applicable rules and regulations of the Nasdaq Capital Market.
Series
J Preferred Offering
On
December 31, 2024, we entered into a securities purchase agreement (the “Series J Purchase Agreement”) with certain accredited
investors, pursuant to which we issued and sold an aggregate of 297,788 restricted shares of our newly designated Series J Preferred
to such investors at a purchase price of $3.02 per share (the “Series J Offering”).
Subject
to certain beneficial ownership limitations, shares of the Series J Preferred shall be convertible into shares of our common stock on
such date that we obtain stockholder approval to remove the Exchange Cap.
Series
K Preferred, Warrant and Unsecured Promissory Note Offering
On
December 31, 2024, we entered into a series of agreements whereby an investor agreed to loan the Company up to $1,000,000 against an
unsecured promissory note (the “$1M Note”). The $1M Note is payable in full on the earlier date of one year from issuance
or the date the Company completes a financing of $5 million or greater, is unsecured and has no prepayment penalty.
In
connection with the $1 million Note, the investor received fifteen percent guaranteed prepaid interest issued in the form of shares
of Series K Preferred as well as 100% warrant coverage, as follows: (1) a warrant exercisable in cash to purchase up to 500,000 shares
of our common stock (the “Cash Warrant”) and (2) a cashless warrant (the “Cashless Warrant”) to purchase up to
500,000 shares of our common stock, each at an exercise price of $4.00 per share, for a period of three years, which warrants are exercisable
six months from the issuance date.
Concurrently,
on December 31, 2024, we entered into a series of agreements whereby additional investors agreed to loan the Company $220,000 against
an unsecured promissory note (the “$220k Note”). The $220k Note has a maturity date of one year from the date thereof, is
unsecured and has no prepayment penalty.
In
connection with the $220k Note, the investors also received fifteen percent guaranteed prepaid interest issued in the form of shares
of Series K Preferred as well as a warrant on to purchase up to 220,000 shares of our common stock. The warrant has an exercise price
of $4.00 per share and is exercisable for a period of three years, beginning on the issuance date. If at the time of any exercise of
the warrant, there is no effective registration statement registering, or no current prospectus available for, the issuance or resale
of the shares by the investor, then such investor may elect to exercise up to 50% of the warrant on a cashless basis. In connection with
the $220k Note, we entered into a registration rights agreement with respect to the shares of common stock underlying the shares of Series
K Preferred and warrant issued to such investor.
Each
investor entered into a securities purchase agreement (the “Series K Purchase Agreement”), pursuant to which we sold an aggregate
of 60,595 restricted shares of our newly designated Series K Preferred to such investors, at a purchase price of $3.02 per share (the
“Series K Offering”).
Subject
to certain beneficial ownership limitations, shares of the Series K Preferred and the warrants issued in connection with the Series K
Offering shall be convertible and exercisable, respectively, into shares of our common stock on such date that we obtain stockholder
approval to remove the Exchange Cap.
Conversion
of Related Party Loans into Series L Preferred
On
December 31, 2024, we entered into debt conversion agreements (the “Related Party Debt Conversion Agreements”) with our chief
executive officer, William Kerby, and chairman of the Board, Donald P. Monaco (the “Related Parties”) whereby the Related
Parties and the Company agreed to convert $1.75 million in existing unsecured promissory notes owed to the Related Parties for monies
advanced to the Company into an aggregate of 579,469 restricted shares of our newly designated Series L Preferred, at a purchase price
of $3.02 per share (the “Series L Offering”).
Subject
to certain beneficial ownership limitations, shares of the Series J Preferred shall be convertible into shares of our common stock on
such date that we obtain stockholder approval to both remove the Exchange Cap and pursuant to Nasdaq Listing Rule 5635(c) (discussed
in additional detail in Proposal 4, below).
Series
M Preferred Offering and Debt Conversion
On
December 31, 2024, we entered into securities purchase agreements with certain accredited investors, pursuant to which we may issue and
sell up to $500,000 of restricted shares of our newly designated Series M Preferred, at a purchase price of $3.02 per share (the
“Series M Offering,” and collectively with the Series J Offering, Series K Offering and Series L Offering, the “Preferred
Offerings”).
In
addition, as part of the Series M Offering, on December 31, 2024, we entered into a debt conversion agreement (the “Debt Conversion
Agreement”) with an existing lender whereby the lender and the Company agreed to convert $350,000 in existing unsecured promissory
notes owed to the lender for monies advanced to the Company into Series M Preferred.
Subject
to certain beneficial ownership limitations, shares of the Series M Preferred shall be convertible into shares of our common stock on
such date that we obtain stockholder approval to remove the Exchange Cap.
Additional
information with respect to the Preferred Offerings and the agreements entered into in connection therewith is contained in our Current
Report on Form 8-K filed with the SEC on January 3, 2025. The discussion herein relating to the Preferred Offerings, Series J, K, L and
M Preferred and the warrants issued in connection with the Series K Offering is qualified in its entirety by reference to the transaction
documents filed as exhibits to such Form 8-K.
Description
of the Series J Preferred
The
following is a brief summary of certain terms and conditions applicable to the Series J Preferred.
Ranking. The
Series J Preferred rank pari passu to the Company’s common stock.
Dividends. Holders
of Series J Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of
Company common stock.
Voting.
Except as provided by our amended and restated articles of incorporation, as amended, or as otherwise required by the NRS, holders of
Series J Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the
outstanding shares of Series J Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series J Preferred
or alter or amend the Series J Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely
effects any rights of the holders of the Series J Preferred, or (c) enter into any agreement with respect to the foregoing.
Conversion.
On the third business day after the date that the Company’s stockholders approve the conversion of Series J Preferred into shares
of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series J Preferred shall automatically be converted
into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series J Conversion Ratio”),
subject to beneficial ownership limitations.
Liquidation.
In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series J Preferred
will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series J Conversion Ratio, with holders
of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
Description
of the Series K Preferred
The
following is a brief summary of certain terms and conditions applicable to the Series J Preferred.
Ranking. The
Series K Preferred rank pari passu to the Company’s common stock.
Dividends. Holders
of Series K Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of
Company common stock.
Voting.
Except as provided by our amended and restated articles of incorporation, as amended, or as otherwise required by the NRS, holders of
Series K Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the
outstanding shares of Series K Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series K Preferred
or alter or amend the Series K Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely
effects any rights of the holders of the Series K Preferred, or (c) enter into any agreement with respect to the foregoing.
Conversion.
On the third business day after the date that the Company’s stockholders approve the conversion of Series K Preferred into shares
of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series K Preferred shall automatically be converted
into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series K Conversion Ratio”),
subject to beneficial ownership limitations.
Liquidation.
In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series K Preferred
will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series K Conversion Ratio, with holders
of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
Description
of the Series L Preferred
The
following is a brief summary of certain terms and conditions applicable to the Series L Preferred.
Ranking. The
Series L Preferred rank pari passu to the Company’s common stock.
Dividends. Holders
of Series L Preferred will be entitled to dividends, if, as and when declared by the Board out of funds at the time legally available
therefor, dividends in the amount of 12% per annum per share of Preferred Stock (subject to appropriate adjustment in the event of any
stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock), and no more. Dividends
on the Preferred Stock shall be fully cumulative, shall accrue without interest and without compounding from the date of first issuance,
and shall, if declared by the Board, be payable quarterly in arrears on March 1, June 1, September 1 and December of each year. All dividends
on the Preferred Stock shall be payable (i) in shares of Common Stock of the Company at the Nasdaq Closing Price; provided, however,
that such prices shall not be less than $3.02 per share, or (ii) cash, at the election of a majority of the independent directors. Any
dividend which shall not be paid on required dividend date on which it shall become due shall be deemed to be “past due”
until such dividend shall be paid or until the share of Preferred Stock with respect to which such dividend became due shall no longer
be outstanding, whichever is the earlier to occur. In the event that any dividend becomes “past due” the per annum rate shall
increase to 14%.
Voting.
Except as provided by our amended and restated articles of incorporation, as amended, or as otherwise required by the NRS, holders of
Series L Preferred are not entitled to voting rights However, the Company may not, without the consent of holders of a majority of the
outstanding shares of Series L Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series L Preferred
or alter or amend the Series L Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely
effects any rights of the holders of the Series L Preferred, or (c) enter into any agreement with respect to the foregoing.
Conversion.
On the third business day after the date that the Company’s stockholders approve the conversion of Series L Preferred into shares
of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series L Preferred shall automatically be converted
into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series L Conversion Ratio”),
subject to beneficial ownership limitations.
Liquidation.
In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series L Preferred
will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series L Conversion Ratio, with holders
of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
Description
of the Series M Preferred
The
following is a brief summary of certain terms and conditions applicable to the Series M Preferred.
Ranking. The
Series M Preferred rank pari passu to the Company’s common stock.
Dividends. Holders
of Series M Preferred will be entitled to dividends, if, as and when declared by the Board out of funds at the time legally available
therefor, dividends in the amount of 12% per annum per share of Preferred Stock (subject to appropriate adjustment in the event of any
stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock), and no more. Dividends
on the Preferred Stock shall be fully cumulative, shall accrue without interest and without compounding from the date of first issuance,
and shall, if declared by the Board, be payable quarterly in arrears on March 1, June 1, September 1 and December of each year. All dividends
on the Preferred Stock shall be payable (i) in shares of Common Stock of the Company at the Nasdaq Closing Price; provided, however,
that such prices shall not be less than $3.02 per share, or (ii) cash, at the election of a majority of the independent directors. Any
dividend which shall not be paid on required dividend date on which it shall become due shall be deemed to be “past due”
until such dividend shall be paid or until the share of Preferred Stock with respect to which such dividend became due shall no longer
be outstanding, whichever is the earlier to occur. In the event that any dividend becomes “past due” the per annum rate shall
increase to 14%.
Voting.
Except as provided by our amended and restated articles of incorporation, as amended, or as otherwise required by the NRS, holders of
Series M Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the
outstanding shares of Series M Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series M Preferred
or alter or amend the Series M Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely
effects any rights of the holders of the Series M Preferred, or (c) enter into any agreement with respect to the foregoing.
Conversion.
On the third business day after the date that the Company’s stockholders approve the conversion of Series M Preferred into shares
of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series M Preferred shall automatically be converted
into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series M Conversion Ratio”),
subject to beneficial ownership limitations.
Liquidation.
In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series M Preferred
will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series M Conversion Ratio, with holders
of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.
Reasons
for Stockholder Approval
Our
common stock is listed on the Nasdaq Capital Market, and, as such, we are subject to the applicable rules of the Nasdaq Stock Market
LLC, including Nasdaq Listing Rule 5635(d), which requires stockholder approval in connection with a transaction other than a public
offering involving the sale, issuance, or potential issuance by the issuer of common stock (or securities convertible into or exercisable
for common stock) equal to 20% or more of the common stock outstanding or 20% or more of the voting power outstanding before the issuance
for a price that is less than the lower of (i) the company’s Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately
preceding the signing of the binding agreement, or (ii) the average of the company’s Nasdaq Official Closing Price (as reflected
on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement (the “Minimum Price”).
Pursuant to Nasdaq rules, the presence of any provision that could cause the conversion or exercise price of a convertible security to
be reduced to below the Minimum Price immediately before the entering into of the binding agreement will cause the transaction to be
viewed as a discounted issuance.
As
discussed above, on December 31, 2024, we sold and issued to various investors in the Preferred Offerings an aggregate of 297,788 shares
of Series J Preferred, 60,595 shares of Series K Preferred, 579,469 shares of Series L Preferred, 133,278 shares of Series M Preferred
and warrants to purchase an aggregate of 1,220,000 shares of our common stock, all at a price below the Minimum Price. The aggregate
number of shares of common stock issuable upon conversion of the preferred shares and exercise of the warrants sold and issued in the
Preferred Offerings would exceed 19.99% of the number of shares of our common stock outstanding immediately prior to closing of the respective
Preferred Offerings. As a result of the foregoing, we are required to obtain stockholder approval of the issuance of the shares of our
Common Stock upon exercise of the Pre-Funded Warrants and Series A Warrants before they may be exercised in order to comply with Nasdaq
Listing Rule 5635(d).
Effect
of the Proposal
In
the event that our stockholders approve this Proposal 3 at the Annual Meeting, the shares of Series J, K, L and M outstanding will automatically
convert into shares of our common stock on the third business day following the Annual Meeting and the warrants issued in connection
with the Series K Offering will become exercisable, in each case subject to certain beneficial ownership limitations set forth in the
respective transaction documents. In the case of the shares of Series L Preferred issued to the Related Parties pursuant to the Related
Party Debt Conversion Agreements, the conversion of the Series L Preferred into shares of our common stock is also subject to stockholder
approval in accordance with Nasdaq Rule 5635(c), to the extent applicable, as set forth in Proposal 4.
In
the event that our stockholders do not approve this Proposal 1 at the Annual Meeting, the shares of Series J, K, L and M Preferred will
not be convertible and the warrants issued in connection with the Series K Offering will not become exercisable unless and until stockholder
approval of such conversions and exercises is obtained.
Interests
of Directors and Executive Officers
As
discussed above, William Kerby, our Chief Executive Officer, and Donald Monaco, Chairman of our Board, each received shares of Series
L Preferred upon conversion of an aggregate of $1.75 million in existing unsecured promissory notes owed to Messrs. Kerby and Monaco.
Because the shares of Series L Preferred issued to Messrs. Kerby and Monaco in the Series L Offering cannot be converted unless and until
the stockholder approval is obtained in accordance with Nasdaq Rule 5635(c), Messrs. Kerby and Monaco have a substantial interest in
the approval of this Proposal 3.
Except
for Messrs. Kerby and Monaco, as discussed above, none of our directors or executive officers have a substantial interest, direct or
indirect, in the matters set forth in this Proposal 3.
Vote
Required
This
proposal will be approved if the number of votes cast “FOR” this proposal exceeds the number of votes cast “AGAINST”
this proposal. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A
VOTE “FOR” THE APPROVAL OF THE ISSUANCE OF MORE THAN 19.99% OF OUR SHARES OF COMMON STOCK UPON CONVERSION OF SERIES J, K,
L AND M PREFERRED STOCK AND EXERCISE OF WARRANTS, IN ACCORDANCE WITH NASDAQ LISTING RULE 5635(D)
PROPOSAL
4
APPROVAL
OF THE ISSUANCE OF COMMON STOCK TO CERTAIN INSIDERS UPON CONVERSION OF SERIES L PREFERRED STOCK, IN ACCORDANCE WITH NASDAQ LISTING RULE
5635(C)
General
In
addition to the approvals that we are seeking pursuant to Proposal 3, we are also asking stockholders to approve the issuance of shares
of our common stock upon the conversion of those shares of Series L Preferred issued to Messrs. Kerby and Monaco upon conversion of certain
an aggregate of $1.75 million in existing unsecured promissory notes owed to Messrs. Kerby and Monaco in the Series L Offering.
Insiders
that Participated in the Series L Offering
On
December 31, 2024, William Kerby, our Chief Executive Officer, converted $0.5 million in existing unsecured promissory notes owed to
Mr. Kerby into an aggregate of 165,562 shares of Series L Preferred in connection with the Series L Offering, at a price of $3.02 per
share.
On
December 31, 2024, Donald Monaco, Chairman of our Board, converted $1.25 million in existing unsecured promissory notes owed to Mr. Monaco
into an aggregate of 413,907 shares of Series L Preferred in connection with the Series L Offering, at a price of $3.02 per share.
Reasons
for Stockholder Approval
We
do not intend for the Series L Offering, including any portion of the shares of Series L Preferred issued to Messrs. Kerby and Monaco
in the Series L Offering, and/or any of the shares of common stock issuable upon conversion of such Series L Preferred in connection
therewith, to constitute any form of “equity compensation” arrangement. However, because our common stock is listed on the
Nasdaq Capital Market, we are subject to Nasdaq Listing Rule 5635(c), which deems the issuance of common stock, or securities convertible
into or exercisable for common stock, to a Nasdaq-listed company’s officers, directors, employees or consultants in a in a transaction
(other than a public offering) at a price less than the market value of such stock, calculated as the consolidated closing bid price
for such shares on the trading day immediately prior to entry into the agreement, as equity compensation requiring stockholder approval.
As
described in Proposal 4, above, the Related Party Debt Conversion Agreements provide for the conversion and issuance of securities to
Messrs. Kerby and Monaco at a price that is less than the closing bid price of our common stock, as reported on the Nasdaq Stock Market,
on the trading day immediately prior to the closing date of the Series L Offering. Because Nasdaq may deem the conversion and issuance
of the outstanding promissory notes into shares of our Series L Preferred and the issuance of shares of our common stock upon conversion
of the Series L Preferred to Messrs. Kerby and Monaco as equity compensation to Messrs. Kerby and Monaco under Nasdaq Rule 5635(c), we
are seeking approval of such issuances in order to ensure compliance with Nasdaq rules.
Effect
of the Proposal
In
the event that our stockholders approve this Proposal 4 at the Annual Meeting, the shares of Series L outstanding will automatically
convert into shares of our common stock on the third business day following the Annual Meeting, in each case subject to certain beneficial
ownership limitations set forth in the transaction documents and receipt of the approvals provided for under Proposal 3, above.
In
the event that our stockholders do not approve this Proposal 1 at the Annual Meeting, the shares of Series J, K, L and M Preferred will
not be convertible and the warrants issued in connection with the Series K Offering will not become exercisable unless and until stockholder
approval of such conversions and exercises is obtained.
In
the event that our stockholders do not approve this Proposal 4 at the Annual Meeting and it is determined that issuance of the Series
L Preferred to Messrs. Kerby and/or Monaco pursuant to the Related Party Debt Conversion Agreement and/or the issuance of the shares
of our common stock upon conversion of the Series L Preferred to Messrs. Kerby and/or Monaco is treated as equity compensation to Messrs.
Kerby and/or Monaco under Nasdaq Rule 5635(c), then the Series L Preferred held by Messrs. Kerby and Monaco, as applicable, will not
become convertible unless and until stockholder approval of such exercises is obtained.
Interests
of Directors and Executive Officers
As
discussed in Proposal 3, above, Mr. Kerby, our Chief Executive Officer, and Mr. Monaco, Chairman of our Board, As discussed above, William
Kerby, our Chief Executive Officer, and Donald Monaco, Chairman of our Board, each received shares of Series L Preferred upon conversion
of an aggregate of $1.75 million in existing unsecured promissory notes owed to Messrs. Kerby and Monaco. Because the treatment of the
issuance of the shares of Series L Preferred to Messrs. Kerby and Monaco upon conversion of the promissory notes owed to them, and/or
the issuance of the shares of our common stock upon conversion of the Series L Preferred by Messrs. Kerby or Monaco, as applicable, may
be treated as equity compensation to Messrs. Kerby and/or Monaco under Nasdaq Rule 5635(c), Messrs. Kerby and Monaco have a substantial
interest in the approval of this Proposal 4.
Except
for Messrs. Kerby and Monaco, as discussed above, none of our directors or executive officers have a substantial interest, direct or
indirect, in the matters set forth in this Proposal 4.
Vote
Required
This
proposal will be approved if the number of votes cast “FOR” this proposal exceeds the number of votes cast “AGAINST”
this proposal. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A
VOTE “FOR” THE APPROVAL OF THE ISSUANCE OF COMMON STOCK TO CERTAIN INSIDERS UPON CONVERSION OF SERIES L PREFERRED STOCK,
IN ACCORDANCE WITH NASDAQ LISTING RULE 5635(C)
PROPOSAL
5
APPROVAL
OF THE ISSUANCE OF MORE THAN 19.99% OF OUR COMMON STOCK UNDER AN EQUITY LINE OF CREDIT, IN ACCORDANCE WITH NASDAQ LISTING RULE 5635(D)
General
We
are asking stockholders to approve the sale and issuance of more than 19.99% of our outstanding shares of our common stock pursuant to
that Securities Purchase Agreement (the “Alumni Purchase Agreement”) entered into with Alumni Capital LP (“Alumni Capital”)
on September 19, 2024, which is structured to serve as an equity line of credit. As of the Record Date, we have not sold any shares of
our common stock under the Alumni Purchase Agreement.
Alumni
Capital Common Stock Securities Purchase Agreement
On
September 19, 2024, we entered into the Alumni Purchase Agreement with Alumni Capital. Pursuant to the Alumni Purchase Agreement, we
have the right, but not the obligation to cause Alumni Capital to purchase up to $10 million shares of our common stock (the “Commitment
Amount”) at the Purchase Price (defined below) during the period beginning on the execution date of the Alumni Purchase Agreement
and ending on the earlier of (i) the date on which Alumni Capital has purchased $10 million shares of common stock pursuant to the Alumni
Purchase Agreement or (ii) December 31, 2025.
Pursuant
to the Alumni Purchase Agreement, the “Purchase Price” means the lowest traded price of Company common stock during the five
business days prior a closing date multiplied by eighty nine percent. No Purchase Notice will be made without an effective registration
statement and no Purchase Notice will be in an amount greater than $500,000.
The
Alumni Purchase Agreement provides
that the number of our common stock shares to be sold to Alumni Capital pursuant to the Alumni Purchase Agreement will not exceed (i)
the number of shares that, when aggregated together with all other shares of our common stock which Alumni Capital is deemed to beneficially
own, would result in it owning more than 4.99% of our outstanding common stock, or (i) 19.99% of our outstanding shares of common stock
as of September 19, 2024 (the “Alumni Exchange Cap”), unless and until the Company receives stockholder approval to issue
shares in excess of the Alumni Exchange Cap, in accordance with Nasdaq rules.
In
consideration for Alumni Capital’s execution and delivery of, and performance under, the Alumni
Purchase Agreement, the Company issued and delivered 32,786 shares of Company common stock (the “Initial
Alumni Commitment Shares”) to Alumni Capital on September 19, 2024 and, within one business day from the date off effectiveness
of the Registration Statement registering the shares issuable pursuant to the Alumni Purchase Agreement for resale by Alumni Capital,
the Company shall cause its transfer agent to issue and deliver as DWAC or DRS shares to Alumni Capital that number of shares of common
stock equal to two percent of the Commitment Amount divided by the VWAP for our common stock for the business day prior to the notice
of effectiveness (together with the Initial Commitment Shares, the “Alumni Commitment Shares”).
No
shares have been sold pursuant to the Alumni Purchase Agreement as of the Record Date.
Additional
information with respect to the Alumni Purchase Agreement and the Alumni Commitment Shares is contained in our Current Report on Form
8-K filed with the SEC on September 25, 2024. The discussion herein relating to the Alumni Purchase Agreement and the Alumni Commitment
Shares is qualified in its entirety by reference to the transaction documents filed as exhibits to such Form 8-K
Reasons
for Stockholder Approval
Our
common stock is listed on the Nasdaq Capital Market, and, as such, we are subject to the applicable rules of the Nasdaq Stock Market
LLC, including Nasdaq Listing Rule 5635(d), which requires stockholder approval in connection with a transaction other than a public
offering involving the sale, issuance, or potential issuance by the issuer of common stock (or securities convertible into or exercisable
for common stock) equal to 20% or more of the common stock outstanding or 20% or more of the voting power outstanding before the issuance
for a price that is less than the lower of (i) the company’s Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately
preceding the signing of the binding agreement, or (ii) the average of the company’s Nasdaq Official Closing Price (as reflected
on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement (the “Minimum Price”).
Pursuant to Nasdaq rules, the presence of any provision that could cause the conversion or exercise price of a convertible security to
be reduced to below the Minimum Price immediately before the entering into of the binding agreement will cause the transaction to be
viewed as a discounted issuance.
As
discussed above, pursuant to the Alumni Capital Purchase Agreement, we have the right, but not the obligation to cause Alumni Capital
to purchase up to $10 million shares of our common stock; provided, however, that unless and until we obtain stockholder approval to
sell and issue a number of shares in excess of the Alumni Exchange Cap, the amount of shares that we may be able to sell will be significantly
less than $10 million. As a result of the foregoing, in order to provide us with the most flexibility to raise additional capital, we
are seeking stockholder approval of the elimination of the Exchange Cap under the Alumni Purchase Agreement, in accordance with Nasdaq
Listing Rule 5635(d).
Effect
of the Proposal
In
the event that our stockholders approve this Proposal 5 at the Annual Meeting, the Alumni Exchange Cap will be eliminated and we will
have the option to issue and sell the maximum number of shares of common stock issuable pursuant to the Alumni Purchase Agreement (up
to $10 million shares of common stock), which would exceed 19.99% of our issued and outstanding shares of common stock as of the date
we executed the Alumni Purchase Agreement. This would allow the Company flexibility in accessing the equity line of credit to pursue
its business growth, current announced partnerships and collaborations.
In
the event that our stockholders do not approve this Proposal 5 at the Annual Meeting, we may be limited in the amount of money we can
draw down on the line of credit under the Alumni Purchase Agreement. The failure of our stockholders to approve this Proposal 5 may result
in our inability to take full advantage of the new equity line of credit and severely limit the Company’s ability to raise additional
capital.
Interests
of Directors and Executive Officers
None
of our directors or executive officers have a substantial interest, direct or indirect, in the matters set forth in this Proposal 5.
Vote
Required
This
proposal will be approved if the number of votes cast “FOR” this proposal exceeds the number of votes cast “AGAINST”
this proposal. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A
VOTE “FOR” THE APPROVAL OF THE ISSUANCE OF MORE THAN 19.99% OF OUR SHARES OF COMMON STOCK UNDER AN EQUITY LINE OF CREDIT,
IN ACCORDANCE WITH NASDAQ LISTING RULE 5635(D)
PROPOSAL
6
ADJOURNMENT
OF THE ANNUAL MEETING TO SOLICIT ADDITIONAL VOTES
General
Our
stockholders may be asked to consider and act upon one or more adjournments of the Annual Meeting, if necessary or appropriate, to solicit
additional proxies in favor of any of the proposals set forth in this Proxy Statement.
If
a quorum is not present at the Annual Meeting, our stockholders may be asked to vote on the proposal to adjourn the Annual Meeting to
solicit additional proxies. If a quorum is present at the Annual Meeting, but there are not sufficient votes at the time of the Annual
Meeting to approve any of the foregoing proposals, our stockholders may also be asked to vote on the proposal to approve the adjournment
of the Annual Meeting to permit further solicitation of proxies in favor of any of the proposals.
If
the adjournment proposal is submitted for a vote at the Annual Meeting, and if our stockholders vote to approve the adjournment proposal,
the Annual Meeting may be adjourned to another place, or a later date or dates, to enable us to solicit additional proxies in favor of
any of the proposals. If the adjournment proposal is approved, and the Annual Meeting is adjourned, we will use the additional time to
solicit additional proxies in favor of the relevant proposals to be presented at the Annual Meeting, including the solicitation of proxies
from stockholders that have previously voted against any of the proposals.
Our
Board believes that, if the number of shares of our stock voting in favor of any of the proposals at the Annual Meeting is insufficient
to approve such proposals, it is in the best interests of our stockholders to enable us, if we so choose and for a limited period of
time, to continue to seek to obtain a sufficient number of additional votes in favor of such proposals. Any signed proxies received by
us in which no voting instructions are provided on such matter will be voted in favor of an adjournment in these circumstances. If the
Annual Meeting is adjourned, the time and place of the adjourned Annual Meeting will be announced at the time the adjournment is taken.
Any adjournment of the Annual Meeting for the purpose of soliciting additional proxies will allow our stockholders who have already sent
in their proxies to revoke them at any time prior to their use at the Annual Meeting, as adjourned or postponed.
Vote
Required
This
proposal will be approved if the number of votes cast “FOR” this proposal exceeds the number of votes cast “AGAINST”
this proposal. We believe that this proposal is considered a routine matter on which brokers can vote in their discretion; accordingly,
we do not expect to receive any broker non-votes on the proposal. However, to the extent that any broker non-votes received, broker non-votes
will have no effect on the outcome of the vote on this proposal. Abstentions will have no effect on the outcome of the vote on this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A
VOTE FOR THE ADJOURNMENT OF THE ANNUAL MEETING PURSUANT TO THIS PROPOSAL 6, TO ANOTHER PLACE, DATE OR TIME, IF DEEMED NECESSARY
OR APPROPRIATE
BOARD
MATTERS AND CORPORATE GOVERNANCE
The
following table sets forth information about Mr. Monaco and each of the other current members of our Board:
| Directors |
|
Class |
|
Age |
|
Position |
|
Director
Since |
|
Current
Term
Expires |
| Donald
P. Monaco |
|
I |
|
72 |
|
Chairman
of the Board and Director |
|
2023 |
|
2025
Annual Meeting |
| Jacob
Brunsberg |
|
II |
|
38 |
|
Director |
|
2022 |
|
2026
Annual Meeting |
| Salvatore
Battinelli(1) |
|
II |
|
83 |
|
Director |
|
2017 |
|
2026
Annual Meeting |
| Dennis
Duitch(1) |
|
III |
|
80 |
|
Director |
|
2017 |
|
2027
Annual Meeting |
| Kent
Summers(1) |
|
III |
|
66 |
|
Director |
|
2018 |
|
2027
Annual Meeting |
| (1) | Member
of our Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. |
Nominee
for Class I Director
See
Proposal 1 for biographical information regarding Donald P. Monaco, our Class I Director nominee.
Continuing
Directors
Dennis
Duitch was appointed to our Board of Directors on August 8, 2017. Mr. Duitch has served as Managing Director of Duitch Consulting
Group, a private consulting company, since 2003. Prior to that time, he practiced public accounting, business management, mediation and
consultancy nationally, with expertise in strategic and operations management, finance, accounting, strategic planning and business operations
for a wide spectrum of companies, including technology, manufacturing and distribution, marketing, real estate, entertainment, and professional
practices. He has served in executive officer roles and as a director of public and private companies, not-for-profit organizations,
including as Vice-Chairman for Accountants Global Network, and as a top-level advisor for public companies, closely held businesses,
families and high-wealth individuals for over thirty years. Mr. Duitch began his career with the international CPA firm Grant Thornton
in its Chicago, San Francisco and Beverly Hills offices before founding Duitch & Franklin LLP, which evolved to become one of Southern
California’s largest independent CPA/Business Management/Consultancy practices, and which was acquired by a public company in 1998.
He subsequently served as President for a consumer products company with direct responsibility for marketing, retail, and fulfillment
operations, until forming Duitch Consulting Group in 2003 to serve clients in advisory, C-level, and board of director roles. Mr. Duitch
is a Certified Family Business and Estate Advisor, and mediator for matters including partner/stockholder agreements and disputes, business
and marital property dissolution, and dysfunctional executive teams and boards of directors. He has lectured extensively in management,
financial and accounting areas for the California CPA Foundation, business and professional groups, has instructed at several colleges
and universities, and has authored technical articles in management and taxation for regional and national publications. Mr. Duitch earned
a B.B.A degree in Accounting from the University of Iowa and a Master of Business Administration in Finance from Northwestern University.
Kent
Summers was appointed to our Board of Directors on January 18, 2018. Mr. Summers was also appointed to serve as a member
of the Company’s Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. Mr. Summers currently
divides his time among a number of independent activities which focus on early-stage technology company formation and development strategies,
and sales planning and execution needs for emerging- and mid-market technology companies located primarily in the Boston metropolitan
area, including: management consultant to private and family-owned businesses; volunteer Mentor and Instructor with the Massachusetts
Institute of Technology Venture Mentoring Services program; regular lectures on enterprise, business-to-business sales to company founders
and students enrolled at the Massachusetts Institute of Technology Sloan School of Management, the Harvard MBA Program, the Wharton School
at the University of Pennsylvania, and a number of domestic and international entrepreneurship support organizations; and consultant
to Fellows enrolled in the Harvard Advanced Leadership Initiative. Mr. Summers has served in those roles at various times from 2003 to
the present. From 2009 to the present, Mr. Summers has served as the non-executive Chairman of CADNexus, Inc., and from 2017 to the present,
as a director and Chairman of the Compensation Committee with iQ3 Connect, Inc. Mr. Summers also currently serves as Chairman, Board
of Managers, Massachusetts Materials Technologies LLC. From 2005 to 2017, Mr. Summers served as Managing Partner at Practical Computer
Applications, Inc., a Boston-based database consulting and engineering services firm, where he was responsible for sales planning and
execution activities. Prior to Practical Computer Applications, from 2001 to 2005, Mr. Summers provided independent merger & acquisition
advisory services to support the sale of privately-owned companies. Over a prior 14-year period, Mr. Summers served in leadership roles
at several software and internet start-ups, including: Chairman and CEO of Collego Corporation (acquired by MRO Software), founder and
CEO of MyHelpDesk, Inc. (acquired by Support.com), founder of PCMovingVan.com (acquired by a PE firm), and Vice President of Marketing
at Electronic Book Technologies, Inc. (acquired by INSO Corporation, formerly listed on Nasdaq). Prior to the software industry, Mr.
Summers served as Technology Analyst at Electronic Joint Venture Partners LLC and Associate Program Trader on the Options Trading Desk
at Bear Stearns & Co. In 1986, Mr. Summers received a BA in English from the University of Houston.
Jacob
Brunsberg was appointed to our Board of Directors on April 1, 2022. He was appointed Senior Vice President of Product Management
and Strategic Relationships on September 20, 2021, on February 16, 2022, he was named President and Chief Operating Officer, and on April
1, 2022, he was named President and Chief Executive Officer, of the Company. He resigned from his executive roles with the Company on
December 29, 2023. Prior to joining the Company, Mr. Brunsberg was a P&L leader for General Electric’s Binder Jet Technology
unit, with management responsibility for strategy, development, commercialization, and overall business performance. Mr. Brunsberg holds
a Bachelor of Science degree in Material Science and Engineering from the University of Wisconsin-Madison.
Salvatore
Battinelli was appointed to our Board of Directors on August 16, 2017. Mr. Battinelli is currently the President and Chief
Executive Officer of Bello e Preciso Co., a manufacturer and wholesaler of Italian-made fashion watches and has served in those roles
since early 2017. Prior to joining Bello e Preciso Co., from 2011 to 2013, Mr. Battinelli served as Vice President of Development and
Long-Term Strategy of North American Management Corporation, a wealth management firm based in Boston, Massachusetts with over $2 billion
in assets under management. From 1987 to 2011, Mr. Battinelli served as Executive Vice President and acting Chief Executive Officer and
Chief Operating Officer of Faneuil Hall Associates, Inc., a concierge boutique family office devoted to five interrelated ultra-high
net-worth families. Mr. Battinelli’s primary responsibilities while at Faneuil Hall Associates included providing planning and
investment advice, the management of approximately 30 asset portfolios and more than 65 individual business entities; and assisting the
families in their various business ventures worldwide while working closely with law, accounting and banking functions. During his tenure
at Faneuil Hall Associates, Mr. Battinelli served as an executive officer or director for certain of the family-owned entities and successfully
managed several portfolio company IPOs, as well as serving as CEO and COO for Designhouse International, a Scandinavian furniture company
operating out of Atlanta, Georgia, which was previously listed on NASDAQ in 1983. From 1970 to 1974, Mr. Battinelli served as Audit Manager
for Deloitte & Touche (formally Touche Ross), where he specialized in management information systems. From 2002 to 2011, Mr. Battinelli
also served as the Chairman of the Board of Directors of HealthLink Europe, BV, a logistics and services company that serves the healthcare
industry. Mr. Battinelli is a Certified Public Accountant and received a BS in accounting and an MBA with an emphasis in international
economics and accounting, both from Babson College.
Director
Independence
Our
Board currently consists of five members. As a result of his previous service as our Chief Executive Officer, Mr. Brunsberg is not considered
an independent director. Our Board has determined that our other directors, Salvatore Battinelli, Dennis Duitch and Kent Summers, constituting
a majority of our directors, are “independent” as that term is defined under Rule 5605(a)(2) of the Nasdaq marketplace rules.
Pursuant to Nasdaq rules, our Board must consist of a majority of independent directors.
The
Nasdaq independence definition includes a series of objective tests, including that the director is not, and has not been for at least
three years, one of our employees and that neither the director nor any of his family members has engaged in various types of business
dealings with us. In addition, as required by Nasdaq rules, our Board has made a subjective determination as to Messrs. Battinelli, Duitch
and Summers, our independent directors, that no relationships exist, which, in the opinion of our Board, would interfere with the exercise
of independent judgment in carrying out the responsibilities of a director. In making these determinations, our Board reviewed and discussed
information provided by the directors and us with regard to each director’s business and personal activities and relationships
as they may relate to us and our management. There are no family relationships among any of our directors or executive officers.
Classified
Board of Directors
In
accordance with our amended and restated bylaws, our Board is divided into three classes with staggered, three-year terms. At each annual
meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification
until the third annual meeting following election. Our directors are classified as follows:
| ● | the
Class I director is Donald P. Monaco, and his current term will expire at the Annual Meeting; |
| | | |
| ● | the
Class II directors are Salvatore Battinelli and Jacob Brunsberg, and their current terms
will expire at our 2026 annual meeting of stockholders; and |
| | | |
| ● | the
Class III directors are Dennis Duitch and Kent Summers, and their current terms will expire
at our 2027 annual meeting of stockholders. |
Our
amended and restated bylaws provide that the authorized number of directors may be changed by resolution of the Board. Any additional
directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as
possible, each class will consist of one-third of the directors. The division of our Board into three classes with staggered three-year
terms may delay or prevent a change of our management or a change in control of our Company.
Leadership
Structure of the Board
Any
director, or our Board as a whole, may be removed with or without cause at any meeting of stockholders by the affirmative vote of the
holders of at least two-thirds of our outstanding voting stock entitled to vote in the election of directors. Our amended and restated
bylaws provide our Board with the discretion to combine or separate the positions of Chairman of the Board and Chief Executive Officer.
Our Board believes it is important to select the Company’s Chairman and Chief Executive Officer in the manner it considers in the
best interests of the Company at any given time. Our Board believes that the Chairman and Chief Executive Officer positions may be filled
by one individual or by two different individuals, as determined by our Board from time to time based on circumstances then in existence.
The
Chairman of the Board presides at all meetings of our Board and exercises and performs such other powers and duties as may be assigned
to him from time to time by the Board or prescribed by our amended and restated bylaws.
Our
Board has no established policy on whether it should be led by a Chairman who is also the Chief Executive Officer, and in the past has
combined the roles of Chairman and Chief Executive Officer. Our Board currently is committed to the separation of the offices of Chairman
and Chief Executive Officer. However, our Board continually evaluates our leadership structure and could, in the future, decide to combine
the Chairman and Chief Executive Officer positions if it believes that doing so would serve the best interests of our Company and our
stockholders.
Board
Meetings and Committees
During
our fiscal year ended February 29, 2024, the Board held 25 meetings, and each director attended at least 75% of the aggregate of (i)
the total number of meetings of our Board held during the period he was a director and (ii) the total number of meetings held by all
committees of our Board on which he served during the periods that he served.
Although
we do not have a formal policy regarding attendance by members of our Board at annual meetings of stockholders, we encourage, but do
not require, our directors to attend. Each of our then current directors attended our 2024 Annual Meeting of Stockholders.
Our
Board has established three standing committees–audit, compensation, and nominating and corporate governance, each of which operates
under a written charter that has been approved by our Board. Each committee charter has been posted on the Investors section of our website
at www.nexttrip.com. The reference to our website address does not constitute incorporation by reference of the information contained
at or available through our website, and you should not consider it to be a part of this prospectus.
Audit
Committee
The
Audit Committee’s responsibilities include:
| |
● |
appointing,
approving the compensation of, and assessing the independence of our registered public accounting firm; |
| |
|
|
| |
● |
overseeing
the work of our registered public accounting firm, including through the receipt and consideration of reports from such firm; |
| |
|
|
| |
● |
reviewing
and discussing with management and the registered public accounting firm our annual and quarterly financial statements and related
disclosures; |
| |
|
|
| |
● |
monitoring
our internal control over financial reporting, disclosure controls and procedures; |
| |
|
|
| |
● |
establishing
procedures for the receipt, retention and treatment of accounting related complaints and concerns; |
| |
|
|
| |
● |
meeting
independently with our registered public accounting firm and management; |
| |
|
|
| |
● |
reviewing
and approving or ratifying any related person transactions; and |
| |
|
|
| |
● |
preparing
the Audit Committee report required by SEC rules. |
The
members of our Audit Committee are Messrs. Duitch, Battinelli and Summers, and Mr. Duitch serves as the chairperson of the committee.
Our Board has determined that each of Messrs. Duitch, Battinelli and Summers is an independent director under the applicable Nasdaq rules
and under SEC Rule 10A-3. All members of our Audit Committee meet the requirements for financial literacy under the applicable rules
and regulations of the SEC and Nasdaq. Our Board has determined that each member of our Audit Committee is an “audit committee
financial expert,” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable
Nasdaq rules and regulations. The Audit Committee met four times during fiscal 2024.
Compensation
Committee
The
Compensation Committee’s responsibilities include:
| |
● |
annually
reviewing and approving corporate goals and objectives applicable to CEO compensation; |
| |
|
|
| |
● |
determining
our CEO’s compensation; |
| |
|
|
| |
● |
reviewing
and approving, or making recommendations to our Board with respect to the compensation of our other executive officers; |
| |
|
|
| |
● |
overseeing
an evaluation of our senior executives; |
| |
|
|
| |
● |
overseeing
and administering our equity incentive plans; |
| |
|
|
| |
● |
reviewing
and making recommendations to our Board with respect to director compensation; and |
| |
|
|
| |
● |
reviewing
and discussing annually with management our “Compensation Discussion and Analysis,” if and when it is required by SEC
rules to be included in our Proxy Statements. |
The
members of our Compensation Committee are Messrs. Duitch, Battinelli and Summers, and Mr. Battinelli serves as the chairperson of the
committee. Our Board has determined that each of Messrs. Duitch, Battinelli and Summers is independent under the applicable Nasdaq rules
and regulations and is a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act. The Compensation
Committee met four times during fiscal 2024.
The
Nominating and Corporate Governance Committee’s responsibilities include:
| |
● |
identifying
individuals qualified to become Board members; |
| |
|
|
| |
● |
recommending
to our board the persons to be nominated for election as directors and to each of the Board’s committees; and |
| |
|
|
| |
● |
overseeing
an annual evaluation of the Board. |
The
members of our Nominating and Corporate Governance Committee are Messrs. Duitch, Battinelli and Summers, and Mr. Duitch serves as the
chairperson of the committee. Our Board has determined that each of Messrs. Duitch, Battinelli and Summers is independent under the applicable
Nasdaq rules and regulations. The Nominating and Corporate Governance Committee met one time during 2024.
Report
of the Audit Committee of the Board of Directors
The
Audit Committee provides assistance to our Board in fulfilling its oversight responsibility to the Company’s stockholders, potential
stockholders, the investment community, and others relating to our financial statements and the financial reporting process, the systems
of internal accounting and financial controls, the internal audit function, the annual independent audit of our financial statements
and the ethics programs when established by our management and our board of directors. The Audit Committee has the sole authority (subject,
if applicable, to stockholder ratification) to appoint or replace the outside auditors and is directly responsible for determining the
compensation of the independent auditors.
The
Audit Committee schedules its meetings with a view to ensuring that it devotes appropriate attention to all of its tasks. In discharging
its oversight role, the Audit Committee is empowered to investigate any matter brought to its attention, with full access to all of our
books, records, facilities and personnel, and to retain its own legal counsel and other advisers as it deems necessary or appropriate.
Haynie
serves as our independent registered public accounting firm and audited our financial statements for the year ended February 29, 2024.
Haynie does not have and has not had any financial interest, direct or indirect, in our company, and does not have and has not had any
connection with our company except in its professional capacity as our independent auditors. The Audit Committee also has selected Haynie
as our independent registered public accountants for our 2025 fiscal year.
The
Audit Committee has reviewed the Company’s audited financial statements for the fiscal year ended February 29, 2024 and has discussed
those financial statements with management and Haynie. The Audit Committee has also received from, and discussed with, Haynie various
communications that such independent registered public accounting firm is required to provide to the Audit Committee, including the matters
required to be discussed by statement on Auditing Standards No. 1301, as adopted by the Public Company Accounting Oversight Board (“PCAOB”).
The Audit Committee also discussed with Haynie matters relating to its independence, including a review of audit and non-audit fees and
the letter and written disclosures made by Hayne to the Audit Committee pursuant to PCAOB Rule 3526 (Communications with Audit Committees
Concerning Independence).
Audit
and non-audit services to be provided by Haynie are subject to the prior approval of the Audit Committee. In general, the Audit Committee’s
policy is to grant such approval where it determines that the non-audit services are not incompatible with maintaining the independent
registered public accounting firm’s independence and there are cost or other efficiencies in obtaining such services from the independent
registered public accounting firm as compared to other possible providers.
In
addition, the Audit Committee reviewed initiatives aimed at strengthening the effectiveness of our internal control structure. As part
of this process, the Audit Committee continued to monitor and review staffing levels and steps taken to implement recommended improvements
in internal procedures and controls.
Based
on these reviews and discussions, the Audit Committee recommended to our Board that our audited financial statements be included in our
Annual Report on Form 10-K for the fiscal year ended February 29, 2024, filed with the SEC.
Respectfully
submitted,
Audit
Committee:
Salvatore
Battinelli
Dennis
Duitch
Kent
Summers
Family
Relationships
There
are no family relationships between or among our directors, executive officers or persons nominated or chosen by us to become directors
or executive officers.
Code
of Ethics and Business Conduct
The
Company has a code of ethics that applies to all employees, including the Company’s principal executive officer, principal financial
officer, and principal accounting officer, as well as to the members of the Board. The code is available on our website at www.nexttrip.com.
The Company intends to disclose any changes in, or waivers from, this code by posting such information on the same website or by filing
a Current Report on Form 8-K, in each case to the extent such disclosure is required by the rules of the SEC or Nasdaq. The reference
to our website address does not constitute incorporation by reference of the information contained at or available through our website,
and you should not consider it to be a part of this proxy statement.
Role
of Board in Risk Oversight Process
Risk
assessment and oversight are an integral part of our governance and management processes. Our Board encourages management to promote
a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic
and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that
include a focused discussion and analysis of the risks we face. Throughout the year, senior management reviews these risks with the Board
at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies,
and presents the steps taken by management to mitigate or eliminate such risks. Our Board does not have a standing risk management committee,
but rather administers this oversight function directly through the Board as a whole, as well as through standing committees of the Board
that will address risks inherent in their respective areas of oversight. In particular, our Audit Committee is responsible for overseeing
our major financial risk exposures and the steps our management has taken to monitor and control these exposures. The Audit Committee
also monitors compliance with legal and regulatory requirements and considers and approves or disapproves of any related-person transactions.
Our Nominating and Governance Committee monitors the effectiveness of our corporate governance guidelines that we may adopt or amend
from time to time. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential
to encourage excessive risk-taking by our management.
DIRECTOR COMPENSATION
We
believe that a combination of cash and equity compensation is appropriate to attract and retain the individuals we desire to serve on
our Board. Our cash compensation policies are designed to encourage frequent and active interaction between directors and our executives
both during and between formal meetings as well as compensate our directors for their time and effort. Further, we believe it is important
to align the long-term interests of our non-employee directors (i.e., directors who are not employed by us as officers or employees)
with those of the Company and its stockholders, and that awarding equity compensation to, and thereby increasing ownership of our common
stock by, our non-employee directors is an appropriate means to achieve this alignment. Directors who are also employees of our company
do not receive compensation for their service on our Board.
Under
our director compensation program for fiscal year 2024, each non-employee director received annual compensation of $25,000, and an option
to purchase 655 shares of our common stock, which is fully vested. All cash fees are paid quarterly. Also, each non-employee director
may be reimbursed for his reasonable expenses incurred in the performance of his duties as a director as our Board determines from time
to time. Our Compensation Committee intends to evaluate our director compensation program and determine whether any changes should be
recommended to the Board.
The
following table sets forth certain information concerning the compensation paid to non-employee directors in fiscal year 2024 for their
services as directors of the Company. The compensation of Mr. Brunsberg, who serves as a director and our former President and Chief
Executive Officer, is described in the Summary Compensation Table of Executive Officers. Our non-employee directors do not receive fringe
or other benefits.
| Name | |
Fees Earned or Paid in Cash ($) | | |
Option Awards ($)(6)(7) | | |
Total ($) | |
| Mark K. Ruport(1) | |
| 25,000 | | |
| 5,797 | | |
| 30,797 | |
| Donald P. Monaco (2) | |
| - | | |
| - | | |
| - | |
| Salvatore Battinelli(3) | |
| 25,000 | | |
| 5,797 | | |
| 30,797 | |
| Dennis Duitch(4) | |
| 25,000 | | |
| 5,797 | | |
| 30,797 | |
| Kent Summers(5) | |
| 25,000 | | |
| 5,797 | | |
| 30,797 | |
| |
(1) |
The
fees shown were paid to Mr. Ruport for services as director. On January 26, 2023, the Company granted Mr. Ruport an option to purchase
up to 655 shares of the Company’s common stock in connection with his service as a director. The exercise price of the option
is equal to $11.60 per share, is fully vested, and had a grant date fair value of $5,797. Mr. Ruport resigned as chairman on December
29, 2023, pursuant to the Share Exchange agreement between NextTrip Group, Sigma Additive Solutions, Inc. and certain other parties
(the “Share Exchange Agreement”).
|
| |
(2) |
Mr.
Monaco was appointed chairman as of December 29, 2023 pursuant to the Share Exchange Agreement, and did not receive any compensation
for his services in fiscal year 2024.
|
| |
(3) |
The
fees shown were paid to Mr. Battinelli for services as a director. On January 26, 2023, the Company granted Mr. Battinelli an option
to purchase up to 655 shares of the Company’s common stock in connection with his service as a director. The exercise price
of the option is equal to $11.60 per share, is fully vested, and had a grant date fair value of $5,797.
|
| |
(4) |
The
fees shown were paid to Mr. Duitch for services as a director. On January 26, 2023, the Company granted Mr. Duitch an option to purchase
up to 555 shares of the Company’s common stock in connection with his service as a director. The exercise price of the option
is equal to $11.60 per share, is fully vested, and had a grant date fair value of $5,797.
|
| |
(5) |
The
fees shown were paid to Mr. Summers for services as a director. On January 26, 2023, the Company granted Mr. Summers an option to
purchase up to 655 shares of the Company’s common stock in connection with his service as a director. The exercise price of
the option is equal to $11.60 per share, is fully vested, and had a grant date fair value of $5,797.
|
| |
(6) |
These
columns represent the aggregate grant date fair value of stock awards and stock options computed in accordance with FASB ASC Topic
718. These amounts do not correspond to the actual value that will be recognized by the named directors from these awards.
|
| |
(7) |
As
of February 29, 2024, all outstanding vested Option Awards granted to directors were subject to an exercisability waiver until such
time as we received shareholder approval to increase our authorized common shares from 1,200,000 to 250,000,000 shares. Such approval
was obtained at a special meeting of stockholders on March 8, 2024. |
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Unless
otherwise indicated, share and per share information in this section gives retroactive effect to the 1-for-20 reverse stock split effected
on September 22, 2023.
Processes
and Procedures for Compensation Decisions
Our
Compensation Committee is responsible for the executive compensation programs for our executive officers and reports to our Board of
Directors on its discussions, decisions and other actions. Typically, our Chief Executive Officer makes recommendations to our Compensation
Committee and is involved in the determination of compensation for the respective executive officers that report to him. Our Chief Executive
Officer does not determine his own compensation. Our Chief Executive Officer makes recommendations to our Compensation Committee regarding
short- and long-term compensation for all executive officers based on our results, an individual executive officer’s contribution
toward these results and performance toward individual goal achievement. Our Compensation Committee then reviews the recommendations
and other data and makes decisions (or makes recommendations to the Board) as to total compensation for each executive officer as well
as each individual compensation component.
The
following table sets forth compensation for services rendered in all capacities to the Company: (i) for each person who served as the
Company’s Chief Executive Officer at any time during the past fiscal year, and (ii) for our two most highly compensated executive
officers, other than our Chief Executive Officer, who were employed with the Company on February 29, 2024 (the foregoing executives are
herein collectively referred to as the “named executive officers”).
Summary
Compensation Table
| Name and Principal Position | |
Fiscal Year | |
Salary ($) (1) | | |
Bonus ($) (1) | | |
Stock Awards ($) | | |
Option Awards ($) (2) | | |
All Other Compensation ($) (1) | | |
Total
($) | |
| Bill Kerby – Chief Executive Officer | |
2024 | |
| 400,000 | | |
| - | | |
| - | | |
| - | | |
| 42,000 | (5) | |
| 441,995 | |
| | |
2023 | |
| 400,000 | | |
| - | | |
| - | | |
| - | | |
| 17,500 | (6) | |
| 417,500 | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Jacob Brunsberg – Former President and Chief Executive Officer and Current Director | |
2024 | |
| 214,333 | | |
| - | | |
| - | | |
| - | | |
| 267,011 | (7) | |
| 481,344 | |
| | |
2023 | |
| 250,000 | | |
| - | | |
| - | | |
| 477,861 | (3) | |
| - | | |
| 727,861 | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Frank Orzechowski - Chief Financial Officer | |
2024 | |
| 200,000 | | |
| - | | |
| - | | |
| - | | |
| 109,073 | (8) | |
| 309,073 | |
| | |
2023 | |
| 200,000 | | |
| - | | |
| - | | |
| 260,976 | (4) | |
| - | | |
| 460,976 | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Lyndsey North, President(9) | |
2024 | |
| 200,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 200,000 | |
| | |
2023 | |
| 151,995 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 151,995 | |
| |
(1) |
Actual
amounts paid or accrued. |
| |
|
|
| |
(2) |
Includes
option awards and stock appreciation rights awards. Stock appreciation rights awards are only payable in cash. As such, no shares
of common stock were reserved in connection with the awards since no shares will be issued pursuant to exercise. The Fair Value of
option and SARs awards are calculated in accordance with FASB ASC Topic 718. The amount recognized for all awards is calculated using
the Black Scholes pricing model. No options or SARs were awarded during the twelve months ended February 29, 2024. |
| |
(3) |
On
July 1, 2022, we granted Mr. Brunsberg: (i) an option to purchase up to 2,490 shares of common stock, with an exercise price of $50.00,
and a grant date fair value of $46,367; (ii) an option to purchase up to 760 shares of common stock, with an exercise price of $50.00,
and a grant date fair value of $14,152; (iii) 9,747 SARs, with an exercise price of $50.00 and a grant date fair value of $181,503;
and (iv) 9,098 SARs in connection with his employment retention agreement. The SARs have an exercise price of $26.00 and had a grant
date fair value of $187,530. On January 26, 2023, we granted Mr. Brunsberg an option to purchase up to 5,457 shares of common stock,
with an exercise price of $11.60 and a grant date fair value of $48,295. In connection with Mr. Brunsberg’s resignation from
the Company, on February 29, 2024, the Compensation Committee of the Board of Directors approved (i) the accelerated vesting of all
unvested options and SARs as of his resignation of December 29, 2023; and (ii) such options and SARs be and remain outstanding and
exercisable for the full duration of the options. Notwithstanding the forgoing, as of February 29, 2024, all of Mr. Brunsberg’s
vested options to purchase shares of our common stock were subject to an exercisability waiver until such time as we received shareholder
approval to increase our authorized common shares from 1,200,000 to 250,000,000 shares. Such approval was obtained at a special meeting
of stockholders on March 8, 2024. |
| |
|
|
| |
(4) |
On
July 1, 2022, we granted Mr. Orzechowski: (i) an option to purchase up to 797 shares of our common stock under our 2013 Equity Incentive
Plan in connection with his employment arrangement. The option has an exercise price of $50.00 and vests as follows: 25% on the date
of the grant, and the remaining 75% in equal monthly installments over the subsequent thirty-six months. As of February 29,2024,
521 shares were vested. The option had a grant date fair value of $14,841; (ii) an option to purchase up to 2,609 shares of our common
stock with an exercise price of $50.00 and vests as follows: 25% on the date of the grant, and the remaining 75% in equal monthly
installments over the subsequent thirty-six months. As of February 29, 2024, 1,691 shares were fully vested. The option had a grant
date fair value of $48,583; (iii) 3,474 SARs with an exercise price of $50.00 and vests as follows: 25% on the date of the grant,
and the remaining 75% in equal monthly installments over the subsequent thirty-six months. As of February 29, 2024, 2,249 SARs were
fully vested and exercisable. The SARs had a grant date fair value of $64,691; and (iv) 4,852 SARs in connection with his employment
retention agreement. The SARs have an exercise price of $26.00 and will vest and become exercisable on March 15, 2025 if Mr. Orzechowski
remains an employee of the Company on that date. The SARs had a grant date fair value of $100,017. On January 26, 2023, we granted
Mr. Orzechowski an option to purchase up to 3,711 shares of common stock. The option has an exercise price of $11.60 and vests as
follows: 50% on the date of the grant, and the remaining 50% in equal monthly installments over the subsequent 23 months. As of February
29, 2024, 2,909 shares were fully vested. The option had a grant date fair value of $32,843. As of February 29, 2024, all of Mr.
Orzechowski’s vested options to purchase shares of our common stock were subject to an exercisability waiver until such time
as we received shareholder approval to increase our authorized common shares from 1,200,000 to 250,000,000 shares. Such approval
was obtained at a special meeting of stockholders on March 8, 2024. |
| |
|
|
| |
(5) |
In
fiscal year 2024, we paid Mr. Kerby $24,000 in connection with various personal financial guarantees, and a personal car allowance
of $18,000 pursuant to the terms of his employment agreement. |
| |
|
|
| |
(6) |
In
fiscal year 2023, we paid Mr. Kerby $10,000 in connection with various personal financial guarantees, and a personal car allowance
of $7,500 pursuant to the terms of his employment agreement. |
| |
|
|
| |
(7) |
In
fiscal year 2024, we paid Mr. Brunsberg a retention bonus of $204,511 and severance of $62,500 in connection with his resignation
from the Company pursuant to the terms of his Retention and Separation Agreement. In addition, Mr. Brunsberg is entitled to receive
an award of 31,250 shares of Restricted Stock or Restricted Stock Units, or a stock option to Purchase up to 31,250 shares of the
Company’s common stock as determined by the 2023 Equity Incentive Plan Administrator. Such award has not been granted as of
February 29, 2024. |
| |
|
|
| |
(8) |
In
fiscal year 2024, we paid Mr. Orzechowski a retention bonus of $109,073 pursuant to the terms of his Retention Bonus and Separation
Agreement. |
| |
|
|
| |
(9) |
Ms.
North’s employment by the Company terminated on January 6, 2025. |
William
Kerby
In
connection with this appointment as Chief Executive Officer of Company on December 29, 2023, the Company and Mr. Kerby entered into an
employment letter agreement, dated as of December 29, 2023. Under the employment agreement, Mr. Kerby will be entitled to receive an
annual base salary of $400,000, which is subject to increase (but not decrease) in the discretion of the Compensation Committee of our
Board based on an annual or special case assessments of his performance and other factors. At the discretion of our Board of Directors,
Mr. Kerby will also be eligible to earn a discretionary, annual fiscal end-of-year incentive bonus in an amount of up to 100% of his
base annual salary. The exact amount of the incentive bonus will be dependent on the achievement of Company milestones and profitability,
and such other milestones as the Board deems appropriate. Mr. Kerby will have the option of receiving some or all of his base annual
salary and any incentive bonus in cash or in shares of our common stock valued for this purpose as set forth in his employment agreement
and will be eligible to receive equity compensation at the discretion and in an amount to be determined by our Board.
During
his employment, Mr. Kerby will be entitled to an automobile allowance of $1,500 per month and to receive all benefits under any and all
deferred compensation plans, retirement plans, life, disability, health, accident and other insurance programs, and similar employee
benefit plans and programs, sick leave and vacation time that the Company elects, in its sole discretion, to provide from time to time
to its executive officers, and to earn four weeks of paid time off in accordance with the Company’s PTO policy.
Mr.
Kerby has entered into various personal guarantees with the Airline Reporting Commission, sellers of travel, merchant providers, financial
institutions, associations and service providers for the benefit of NextTrip, in consideration of which the Company agrees in his employment
agreement to pay him a $2,000 per month guarantee fee for so long as the employment agreement and the guarantees remain in place. In
the event Mr. Kerby resigns for “Good Reason” (as defined in the employment agreement), or his employment is terminated by
the Company for any reason, the Company will immediately eliminate any and all guarantees failing which, for each month the guarantees
remain in place, the monthly guarantee fee will rise to $10,000 per month after 30 days in the event the Company is unable to assume
the guarantees during such 30-day period.
The
term of Mr. Kerby’s employment under his employment agreement will continue from month-to-month until terminated by either party
with 30 days’ prior written notice, unless sooner terminated in accordance with the terms thereof. Should the Company notice the
termination of Mr. Kerby’s employment agreement (other than as a result of death, “Disability” or “Cause,”
as defined therein), he will be entitled to payment of an amount equal to 12 months of his base annual salary in a lump sum payment upon
termination and the continuation of his health care coverage, at the Company’s expense, for up to 12 months following the termination
(collectively, the “Kerby Severance Payments”). In addition, in the event that Mr. Kerby’s agreement is terminated
by the Company for any reason within 12 months from the date of closing of the Acquisition, Mr. Kerby will be entitled to receive the
Kerby Severance Payments and the Contingent Shares will automatically accelerate and be issuable in full if not yet earned or issued.
Jacob
Brunsberg
On
September 7, 2021, we entered into an “at-will’ employment letter agreement with Jacob Brunsberg, effective as of September
20, 2021 (the “effective date”), pursuant to which Mr. Brunsberg agreed to serve as Senior Vice-President, Product Management
and Strategic Relationships on an “at-will” basis. As of February 16, 2022, Mr. Brunsberg was appointed President and Chief
Operating Officer, and as of April 1, 2022, Mr. Brunsberg was appointed President, Chief Executive Officer, and Principal Executive Officer
of the Company. Additionally, Mr. Brunsberg was appointed to serve as a member of our Board of Directors, effective as of April 1, 2022,
with a term expiring at the 2025 annual meeting of stockholders.
Under
the employment letter agreement. Mr. Brunsberg is entitled to (i) an annual base salary of $200,000, which was increased to $250,000
effective February 16, 2022, and (ii) all benefits that we elect in our sole discretion to provide from time to time to our other executive
officers,, and received a grant of a five-year stock option to purchase up to 100,000 shares of common stock of the Company, which has
an exercise price equal to the closing price of the Company’s common stock on the effective date, and vested and became exercisable
in full on the effective date. The option is on such other terms and provisions as are contained in the Company’s standard form
nonqualified stock option agreement.
Additionally,
during the term of his employment, Mr. Brunsberg is eligible to receive one or more bonuses relating to each fiscal year in recognition
of his achievement of individual and Company goals established by the Board of Directors from time to time. However, the decision to
provide any such bonuses and the amount and terms of any such bonuses is in the sole discretion of the Board of Directors. On January
24, 2022, Mr. Brunsberg was awarded a performance bonus of $19,876 for 2021. On December 29, 2023, Mr. Brunsberg resigned as President
and Chief Executive Officer but remains a member of our Board.
Lyndsey
North
On
June 17, 2022, we entered into an “at will” employment agreement, with Lyndsey North under which she was engaged to serve
as Vice President of Marketing of the Company. As of September 28, 2022, Ms. North was appointed President of the Company. Under the
terms of Ms. North’s employment agreement, she was entitled to receive an annual base salary of $155,000, which was increased to
$200,000 effective September 28, 2022. Pursuant to the employment agreement, Ms. North was granted 4,000 Stock Appreciation Rights (“SARs”)
at an exercise price of $7.00, which were to vest over a period of three years, with one-third of the award vesting each year on her
employment anniversary date. At the discretion of the Board, and subject to the achievement of certain performance goals, Ms. North was
also eligible for a performance bonus consisting of a cash award of up to 30% of base salary, which was increased to 50% of base salary,
and a SAR award of up to 25% of base salary. Ms. North was eligible to participate in the Company’s group benefit plans, including
medical, dental, and vision plans, as well as a 401K plan.
On
January 6, 205 (the “Termination Date”), Ms. North’s employment by the Company terminated, and her employment
also terminated as of that date. In connection with her departure, the Company paid Ms. North all deferred compensation owed to Ms. North
as of the Termination Date and, subject to her execution and non-revocation of a waiver and release of claims agreement, Ms. North will
also be entitled to receive accrued interest on her deferred compensation through the Termination Date, plus severance in an amount equal
to one month of her base salary.
Frank
D. Orzechowski
On
July 1, 2019, we entered into an “at will” employment agreement, with Frank Orzechowski under which he was engaged to serve
as our Chief Financial Officer, Treasurer, Principal Accounting Officer and Corporate Secretary of the Company. Under Mr. Orzechowski’s
employment agreement, he was entitled to receive an annual base salary of $135,000, which was increased to $155,000 effective March 1,
2020, which was increased to $180,000 on January 1, 2021, and which was increased to $200,000 on October 1, 2021. Pursuant to the employment
agreement, Mr. Orzechowski was granted (1) a stock option to purchase up to 250 shares of common stock of the Company, at an exercise
price equal to $14.00 per share, which was the closing market price of the Company’s common stock on July 1, 2019 (i.e., the Effective
Date), and (2) to purchase up to 6,000 shares of common stock of the Company, with an exercise price of $14.00, and will vest and become
exercisable as follows: 387 shares vested and became exercisable on the one-year anniversary of the Effective Date, 900 shares vested
and became exercisable on the second-year anniversary of the Effective Date, 1,413 shares will vest and become exercisable on the third-year
anniversary of the Effective Date, and 3,300 shares will vest and become exercisable on the fourth-year anniversary of the Effective
Date, provided, in each case, that Mr. Orzechowski remains an employee of the Company through such vesting dates. Further, Mr. Orzechowski
is eligible to participate in the Company’s 2013 Equity Incentive Plan, and is eligible to receive medical and dental benefits,
life insurance, short and long-term disability coverage, and to participate in the Company’s Section 125 cafeteria plan, vision
plan and 401K plan.
Compensation
Recovery Policy
On
November 29, 2023, we adopted a compensation recovery policy (the “Compensation Recovery Policy”) that is designed to comply
with, and will be interpreted in a manner consistent with, Section 10D and Rule 10D-1 of the Exchange Act and the applicable rules of
the Nasdaq Stock Market, including any interpretive guidance provided by Nasdaq. Under our Compensation Recovery Policy, in the event
of an accounting restatement due to the Company’s material noncompliance with any financial reporting requirement under the securities
laws, including any required accounting restatement to correct a material error in previously issued financial statements, or that would
result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, the Company
must recover erroneously awarded incentive-based compensation previously paid to the Company’s executive officers in accordance
with the terms of such Compensation Recovery Policy. Furthermore, under the Compensation Recovery Policy, the Company is prohibited from
indemnifying any executive officer or former executive officer against the loss of erroneously awarded incentive-based compensation and
from paying or reimbursing an executive officer for purchasing insurance to cover any such loss.
Outstanding
Equity Awards at 2024 Fiscal Year-End
The
following table sets forth outstanding stock options granted under our 2013 Equity Incentive Plan and SARs under our 2020 Stock Appreciation
Rights Plan that are held by our named executive officers as of February 29, 2024:
| | |
Option Awards(1) | | |
|
| Name | |
Number of securities underlying unexercised options (#) exercisable | | |
Number of securities underlying unexercised options (#) unexercisable | | |
Option exercise price ($) | | |
Option expiration date |
| Jacob Brunsberg(2) | |
| - | | |
| 5,000 | | |
$ | 63.60 | | |
9/20/2026 |
| | |
| - | | |
| 3,500 | | |
$ | 50.00 | | |
2/16/2027 |
| | |
| 1,500 | | |
| - | | |
$ | 50.00 | | |
2/16/2027 |
| | |
| - | | |
| 760 | | |
$ | 50.00 | | |
7/1/2027 |
| | |
| - | | |
| 2,490 | | |
$ | 50.00 | | |
7/1/2027 |
| | |
| 9,747 | | |
| - | | |
$ | 50.00 | | |
7/1/2027 |
| | |
| 9,098 | | |
| - | | |
$ | 26.00 | | |
7/1/2027 |
| | |
| - | | |
| 5,457 | | |
$ | 11.60 | | |
1/25/2028 |
| | |
| | | |
| | | |
| | | |
|
| Frank Orzechowski(3) | |
| - | | |
| 13 | | |
$ | 280.00 | | |
7/1/2024 |
| | |
| - | | |
| 300 | | |
$ | 280.00 | | |
7/1/2024 |
| | |
| - | | |
| 1,750 | | |
$ | 50.00 | | |
6/14/2025 |
| | |
| 902 | | |
| - | | |
$ | 52.60 | | |
6/22/2025 |
| | |
| - | | |
| 2,429 | | |
$ | 68.40 | | |
8/11/2026 |
| | |
| 1,620 | | |
| 809 | | |
$ | 68.40 | | |
8/11/2026 |
| | |
| - | | |
| 797 | | |
$ | 50.00 | | |
7/1/2027 |
| | |
| - | | |
| 2,609 | | |
$ | 50.00 | | |
7/1/2027 |
| | |
| 2,249 | | |
| 1,225 | | |
$ | 50.00 | | |
7/1/2027 |
| | |
| - | | |
| 4,852 | | |
$ | 26.00 | | |
7/1/2027 |
| | |
| - | | |
| 3,711 | | |
$ | 11.60 | | |
1/25/2028 |
| (1) | On
June 23, 2020, we adopted the 2020 Stock Appreciation Rights Plan (the “SAR Plan”).
The SAR Plan provides for incentive awards in the form of SARs payable in cash. No shares
of common stock were reserved in connection with the adoption of the SAR Plan since no shares
will be issued pursuant to the Plan. Awards issued under the SAR Plan are included in the
table. |
| (2) | On
September 20, 2021, in conjunction with the hiring of Jacob Brunsberg, the Company’s
former President and Chief Executive Officer, the Company granted to Mr. Brunsberg an option
to purchase 5,000 shares of our common stock with an exercise price of $63.60, which was
fully vested on the date of the grant. On February 16, 2022, the Company granted an option
to Mr. Brunsberg to purchase up to 3,500 shares of common stock with an exercise price of
$50.00, which as of February 29, 2024, was fully vested. Also on February 16, 2022, the Company
granted 1,500 SARs to Mr. Brunsberg, with an exercise price of $50.00, which as of February
29, 2024, was fully vested and exercisable. On July 1, 2022, we granted Mr. Brunsberg: (i)
an option to purchase up to 760 shares of our common stock with an exercise price of $50.00,
which as of February 29, 2024, was fully vested; (ii) an option to purchase up to 2,490 shares
of our common stock with an exercise price of $50.00, which as of February 29, 2024, was
fully vested; (iii) 9,747 SARs with an exercise price of $50.00, which as of February 29,
2024, was fully vested and exercisable; and (iv) 9,098 SARs in connection with his employment
retention agreement. The SARs have an exercise price of $26.00 and as of February 29, 2024,
were fully vested and exercisable. On January 26, 2023, we granted Mr. Brunsberg an option
to purchase up to 5,457 shares of common stock with an exercise price of $11.60, which as
of February 29, 2024 was fully vested. As of February 29, 2024, all of Mr. Brunsberg’s
vested options to purchase shares of our common stock were subject to an exercisability waiver
until such time as we received shareholder approval to increase our authorized common shares
from 1,200,000 to 250,000,000 shares. Such approval was obtained at a special meeting of
stockholders on March 8, 2024. |
| | | |
| (3) | On
July 1, 2019, in conjunction with the hiring of Frank Orzechowski, our Chief Financial Officer,
the Company granted to Mr. Orzechowski (i) an option to purchase 13 shares of our common
stock with an exercise price of $280.00, which fully vested on July 1, 2019; and (ii) an
option to purchase up to 300 shares of our common stock, with an exercise price of $280.00,
which as of February 29, 2024was fully vested. On May 28, 2020, we granted Mr. Orzechowski
an option to purchase 1,750 shares of our common stock under our 2013 Equity Incentive Plan
in connection with his employment arrangement. The option has an exercise price of $50.00,
which as of February 29, 2024 was fully vested. On June 23, 2020, pursuant to our 2020 Stock
Appreciation Rights Plan, we granted Mr. Orzechowski 902 SARs. The SARs have an exercise
price of $52.60 which as of February 29, 2024 were fully vested and exercisable. On August
11, 2021, we granted Mr. Orzechowski an option to purchase 2,429 shares of our common stock
under our 2013 Equity Incentive Plan in connection with his employment arrangement. The option
has an exercise price of $68.40 and as of February 29, 2024, 2,129 shares were fully vested,
and the remaining 300 shares will vest in equal monthly installments over the next eight
months. On August 11, 2021, pursuant to our 2020 Stock Appreciation Rights Plan, we granted
Mr. Orzechowski 2,429 SARs. The SARs have an exercise price of $68.40 and will vest and become
exercisable in three equal installments on each of the first, second, and third anniversaries
of the grant date. As of February 29, 2024, 1,620 SARs were fully vested and exercisable.
On July 1, 2022, we granted Mr. Orzechowski: (i) an option to purchase up to 797 shares of
our common stock with an exercise price of $50.00. As of February 29, 2024, 521 were fully
vested, and the remaining 276 shares will vest in equal monthly installments over the next
sixteen months; (ii) an option to purchase up to 2,609 shares of our common stock with an
exercise price of $50.00. As of February 29, 2024, 1,691 shares were fully vested and the
remaining 918 shares will vest in equal monthly installments over the next sixteen months;
(iii) 3,474 SARs with an exercise price of $50.00. As of February 29, 2024, 2,249 SARs were
fully vested and exercisable, and the remaining 1,225 SARs will vest in equal monthly installments
over the next sixteen months; and (iv) 4,852 SARs in connection with his employment retention
agreement. The SARs have an exercise price of $26.00 and will vest and become exercisable
on March 15, 2025 if Mr. Orzechowski remains an employee of the Company on that date. On
January 26, 2023, we granted Mr. Orzechowski an option to purchase up to 3,711 shares of
our common stock, with an exercise price of $11.60. As of February 29, 2024, 2,909 shares
were fully vested, and the remaining 802 shares will vest in equal monthly installments over
the next ten months. As of February 29, 2024, all of Mr. Orzechowski’s vested options
to purchase shares of our common stock were subject to an exercisability waiver until such
time as we received shareholder approval to increase our authorized common shares from 1,200,000
to 250,000,000 shares. Such approval was obtained at a special meeting of stockholders on
March 8, 2024. |
Equity
Awards
We
offer stock options, stock appreciation rights, and stock awards to certain of our employees, including our executive officers, as the
long-term incentive component of our compensation program. We generally grant equity awards to new hires upon their commencing employment
with us. Our stock options allow employees to purchase shares of our common stock at a price per share equal to the fair market value
of our common stock on the date of grant and may or may not be intended to qualify as “incentive stock options” for U.S.
federal income tax purposes. Our stock appreciation rights allow employees to receive a cash payment for the difference between the market
price of our common stock on the date of exercise and the strike price. We sometimes also offer stock options, stock appreciation rights
and stock awards to our consultants in lieu of cash. Our stock options allow consultants to purchase shares of our common stock at a
price per share equal to the fair market value of our common stock on the date of grant and are not intended to qualify as “incentive
stock options” for U.S. federal income tax purposes. Our stock appreciation rights allow consultants to receive a cash payment
for the difference between the market price of our common stock on the date of exercise and the strike price. Stock options, stock appreciation
rights, and stock awards granted to our executive officers may be subject to accelerated vesting in certain circumstances.
Retirement
Plans
We
maintain two qualified 401(k) plans, in which all eligible employees may participate. We make safe harbor contributions to both plans:
one plan matches 100% of each participant’s contribution up to 3% of salary, and 50% of the next 2% of salary contributed, and
the other plan makes a 3% non-elective contribution for all eligible participants. Safe harbor contributions are 100% vested. We may
also elect, on an annual basis, to make a discretionary contribution to the plan, but have not done so to date. Our elective matches
and elective contributions vest to participant accounts as follows: 20% after two years of service, and 20% per year thereafter until
the participant reaches 6 years of service, at which time, employer contributions vest 100%. As a tax-qualified retirement plan, contributions
to the 401(k) plans and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plans.
No
Tax Gross-Ups
We
do not make gross-up payments to cover our executive officers’ personal income taxes that may pertain to any of the compensation
paid or provided by our Company.
2023
Equity Incentive Plan
On
November 19, 2023, our Board adopted the Company’s 2023 Equity Incentive Plan, which we refer to as the “2023 Plan.”
Our
Board believes that the grant of options and other stock awards is an important incentive for the Company’s employees, officers
and directors. Previously, we issued options and stock awards pursuant to our 2013 Equity Incentive Plan, which plan expired according
to the terms thereof in March 2023.
A
summary of the 2023 Plan is set forth below.
Plan
Purpose
Our
Board of Directors adopted the 2023 Plan to (1) encourage selected employees, officers, directors, consultants and advisers to improve
our operations and increase our profitability, (2) encourage selected employees, officers, directors, consultants and advisers to accept
or continue employment or association with us, and (3) increase the interest of selected employees, officers, directors, consultants
and advisers in our welfare through participation in the growth in value of our common stock. All of our current employees, directors
and consultants are eligible to participate in the 2023 Plan.
Administration
The
2023 Plan is to be administered by the Board or by a committee to which administration of the 2023 Plan, or of part of thereof, is delegated
by the Board. The 2023 Plan is currently administered by our Compensation Committee, which we refer to below as the “Administrator.”
The Administrator is responsible for selecting the officers, employees, directors, consultants and advisers who will receive Options,
Stock Appreciation Rights and Stock Awards. Subject to the requirements imposed by the 2023 Plan, the Administrator is also responsible
for determining the terms and conditions of each Option and Stock Appreciation Right award, including the number of shares subject to
the Option, the exercise price, expiration date and vesting period of the Option and whether the option is an Incentive Option or a Non-Qualified
Option. Subject to the requirements imposed by the 2023 Plan, the Administrator is also responsible for determining the terms and conditions
of each Stock Award, including the number of shares granted, the purchase price (if any), and the vesting, transfer and other restrictions
imposed on the stock. The Administrator has the power, authority and discretion to make all other determinations deemed necessary or
advisable for the administration of the 2023 Plan or of any award under the 2023 Plan.
The
2023 Plan is not subject to the Employee Retirement Income Security Act of 1974 and is not a qualified pension, profit sharing or bonus
plan under Section 401(a) of the Internal Revenue Code.
Stock
Subject to the 2023 Plan
The
aggregate number of shares of common stock set aside and reserved for issuance under the 2023 Plan is 7,000,000 shares.
If
awards granted under the 2023 Plan expire or otherwise terminate or are cancelled without being exercised in full, the shares of common
stock not acquired pursuant to such awards will again become available for issuance under the 2023 Plan. If shares of common stock issued
pursuant to awards under the 2023 Plan are forfeited to or repurchased by us, the forfeited or repurchased stock will again become available
for issuance under the 2023 Plan.
If
shares of common stock subject to an award are not delivered to a participant because such shares are withheld for payment of taxes incurred
in connection with the exercise of an Option, or the issuance of shares under a Stock Award, or the award is exercised through a reduction
of shares subject to the award (“net exercised”), then the number of shares that are not delivered will not again be available
for issuance under the 2023 Plan. In addition, if the exercise price of any award is satisfied by the tender of shares of common stock
to us (whether by actual delivery or attestation), the shares tendered will not again be available for issuance under the 2023 Plan.
Eligibility
All
directors, employees, consultants and advisors of the Company and its subsidiaries are eligible to receive awards under the 2023 Plan.
Incentive Options may only be granted under the 2023 Plan to a person who is a full-time officer or employee of the Company or a subsidiary.
The Administrator will determine from time-to-time which directors, employees, consultants and advisers will be granted awards under
the 2023 Plan.
Terms
of Awards
Maximum
Grant
The
maximum number of shares of Common Stock subject to a Stock Award granted during a single Fiscal Year to any Non-Employee Director (together
with any cash fees paid to such Non-Employee Director during the Fiscal Year) is not permitted to exceed a total value of $500,000. The
value of the Stock Award is based on the fair value for financial reporting purposes on the grant date.
Written
Agreement
Each
award under the 2023 Plan will be evidenced by an agreement in a form approved by the Administrator.
Exercise
Price; Base Value
The
exercise price for a Non-Qualified Option or an Incentive Option may not be less than 100% of the fair market value of the Common Stock
on the date of the grant of the Non-Qualified Option or Incentive Option. With respect to an Option holder who owns stock possessing
more than 10% of the total voting power of all classes of our stock, the exercise price for an Incentive Option may not be less than
110% of the fair market value of the Common Stock on the date of the grant of the Incentive Option. The base value of a Stock Appreciation
Right shall also be no less than 100% of the Common Stock on the date of the grant of the Stock Appreciation Right. The 2023 Plan does
not specify a minimum exercise price for Stock Awards.
Vesting
Each
Option, Stock Appreciation Right or Stock Award will become exercisable or non-forfeitable (that is, “vest”) under conditions
specified by the Administrator at the time of grant. Vesting typically is based upon continued service as a director or employee but
may be based upon any performance criteria and other contingencies that are determined by the Administrator. Shares subject to Stock
Awards may be subject to specified restrictions concerning transferability, repurchase by the Company and forfeiture of the shares issued,
together with such other restrictions as may be determined by the Administrator.
Expiration
Date
Each
Option or Stock Appreciation Right must be exercised by a date specified in the award agreement, which may not be more than ten years
after the grant date. Except as otherwise provided in the relevant agreement, an Option or Stock Appreciation Right ceases to be exercisable
ninety days after the termination of the holder’s employment with us.
Transfers
of Options
Unless
otherwise determined by the Administrator, Options are not transferable except by will or the laws of descent and distribution.
Purchase
Price Payment
Unless
otherwise determined by the Administrator, the purchase price of Common Stock acquired under the 2023 Plan is payable by cash or check
at the time of an Option exercise or acquisition of a Stock Award. The Company does not charge participants any fees or commissions in
connection with their acquisition of Common Stock under the 2023 Plan. The Administrator also has the discretion to accept the following
types of payment from participants: shares of Common Stock, cash or a combination thereof.
Withholding
Taxes
At
the time of his or her exercise of an Option or Stock Appreciation Right, an employee is responsible for paying all applicable federal
and state withholding taxes. A holder of Stock Awards is responsible for paying all applicable federal and state withholding taxes once
the shares covered by the award cease to be forfeitable or at any other time required by applicable law.
Securities
Law Compliance
Shares
of Common Stock will not be issued pursuant to the exercise of an Option or the receipt of a Stock Award unless the Administrator determines
that the exercise of the Option or receipt of the Stock Award and the issuance and delivery of such shares will comply with all relevant
provisions of law, including, without limitation, the Securities Act, applicable state and foreign securities laws and the requirements
of any stock exchange on which our Common Stock is traded.
Effects
of Change of Control
Except
as otherwise provided in an Award Agreement, in the event of a Change in Control, all outstanding Options and Stock Appreciation Rights
shall become immediately exercisable with respect to 100% of the shares subject to such Options or Stock Appreciation Rights, and/or
the Restricted Period shall expire immediately with respect to 100% of the outstanding shares of Restricted Stock or Restricted Stock
Units.
With
respect to Performance Share Awards and Cash Awards, in the event of a Change in Control, all Performance Goals or other vesting criteria
will be deemed achieved at 100% of target levels and all other terms and conditions will be deemed met.
In
general, a “Change of Control” means:
| |
● |
A
sale of all or substantially all of our assets; |
| |
● |
Our
liquidation or dissolution; |
| |
● |
A
purchase or other acquisition of 51% or more of our Common Stock |
| |
● |
Our
merger or consolidation with or into another corporation. |
Other
Adjustment Provisions
If
the stock of the Company is changed by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination or
reclassification, appropriate adjustments shall be made by the Administrator, in its discretion, in (1) the number and class of shares
of stock subject to the 2023 Plan and each Option and grant of Stock Awards outstanding under the 2023 Plan, and (2) the purchase price
of each outstanding Option and (if applicable) Stock Award. For example, if an Option is for 1,000 shares for $20.00 per share and there
is a 2-for-1 stock split, the Option would be adjusted to be exercisable for 2,000 shares at $10.00 per share.
Amendment
or Termination of the Plan
The
Board of Directors may at any time amend, discontinue or terminate the 2023 Plan. With specified exceptions, no amendment, suspension
or termination of the Plan may adversely affect outstanding Options or Stock Appreciation Rights or the terms that are applicable to
outstanding Stock Awards. No amendment, suspension or termination of the Plan requires stockholder approval unless such approval is required
under applicable law or under the rules of any stock exchange on which our Common Stock is traded. Unless terminated earlier by the Board,
the 2023 Plan will terminate on the tenth anniversary of the date of the 2023 Plan’s adoption by the Board.
Federal
Income Tax Consequences
The
following discussion is a summary of the federal income tax provisions relating to the grant and exercise of awards under the 2023 Plan
and the subsequent sale of Common Stock acquired under the 2023 Plan. The tax effect of awards may vary depending upon the circumstances,
and the income tax laws and regulations change frequently. This summary is not intended to be exhaustive and does not constitute legal
or tax advice.
General.
A recipient of an award of Options or Stock Appreciation Rights under the 2023 Plan will realize no taxable income at the time of grant
if the exercise price is not less than the fair market value of our Common Stock on the date of the grant. The recipient generally will
realize no taxable income at the time of a grant of a Stock Award so long as the Stock Award is not vested (that is, remains subject
to forfeiture and is not transferable) and an election under Section 83(b) of the Internal Revenue Code is not made.
Non-Qualified
Options. The holder of a Non-Qualified Option will recognize ordinary income at the time of the Non-Qualified Option exercise in
an amount equal to the excess of the fair market value of the shares on the date of exercise over the exercise price. This taxable income
will be subject to payroll tax withholding if the holder is an employee.
When
a holder disposes of shares acquired upon the exercise of a Non-Qualified Option, any amount received in excess of the fair market value
of the shares on the date of exercise will be treated as long-term or short-term capital gain, depending upon the holding period of the
shares, and if the amount received is less than the fair market value of the shares on the date of exercise, the loss will be treated
as long-term or short-term capital loss, depending upon on the holding period of the shares.
Incentive
Options. The holder of an Incentive Option will not recognize taxable income upon exercise of the Incentive Option. In order to retain
this tax benefit, the holder must make no disposition of the shares so received for at least one year from the date of exercise and for
at least two years from the date of grant of the Incentive Option. The holder’s compliance with the holding period requirement
and other applicable tax provisions will result in the realization of long-term capital gain or loss when he or she disposes of the shares,
measured by the difference between the exercise price and the amount received for the shares at the time of disposition.
If
a holder disposes of shares acquired by exercise of an Incentive Option before the expiration of the required holding period, the gain,
if any, arising from such disqualifying disposition will be taxable as ordinary income in the year of disposition to the extent of the
lesser of (1) the excess of the fair market value of the shares over the exercise price on the date the Incentive Option was exercised
or (2) the excess of the amount realized over the exercise price upon such disposition. Any amount realized in excess of the fair market
value on the date of exercise is treated as long-term or short-term capital gain, depending upon the holding period of the shares. If
the amount realized upon such disposition is less than the exercise price, the loss will be treated as long-term or short-term capital
loss, depending upon the holding period of the shares.
For
purposes of the alternative minimum tax, the holder will recognize as an addition to his or her tax base, upon the exercise of an Incentive
Option, an amount equal to the excess of the fair market value of the shares at the time of exercise over the exercise price. If the
holder makes a disqualifying disposition in the year of exercise, the holder will recognize taxable income for purposes of the regular
income tax and the holder’s alternative minimum tax base will not be additionally increased.
Stock
Appreciation Rights. The holder of a Stock Appreciation Right will recognize ordinary income at the time that it is exercised in
an amount equal to the excess of the fair market value of the number of shares of Common Stock as to which it is exercised on the date
of exercise over their value at the date of grant. This taxable income will be subject to payroll tax withholding if the holder is an
employee.
Stock
Awards. The recipient of a Stock Award will recognize ordinary income when the stock vests in an amount equal to the excess of the
fair market value of the shares at the time of vesting over the purchase price for the shares, if any, subject to payroll tax withholding
if the holder is an employee. When the recipient sells a Stock Award that has vested, any amount received in excess of the fair market
value of the shares on the date of vesting will be treated as long-term or short-term capital gain, depending upon the holding period
of the shares (after vesting has occurred), and if the amount received is less than the fair market value on the date of vesting, the
loss will be treated as long-term or short-term capital loss, depending on the holding period of the shares. Dividends paid on Stock
Awards that have not vested and that have not been the subject of an election under Section 83(b) of the Internal Revenue Code are treated
as compensation income, subject to payroll tax withholding with respect to an employee.
Section
83(b) of the Internal Revenue Code permits the recipient to elect, not more than thirty days after the date of receipt of a Stock Award,
to include as ordinary income the difference between the fair market value of the Stock Award on the date of grant and its purchase price
(rather than being taxed as the shares vest). If such an election is made, the holding period for long-term capital gain or loss treatment
will commence on the day following the receipt of the Stock Award, dividends on the Stock Award will be treated as such and not as compensation,
and the tax basis of the shares will be their fair market value at the date of grant.
Deduction
for the Company. The Company will be entitled to a deduction for federal income tax purposes at the same time and in the same amount
as the recipient of an award is considered to have realized ordinary income as a result of the award, assuming that the limitation under
Section 162(m) of the Internal Revenue Code is not applicable. Assuming that the holder of shares received on exercise of an Incentive
Option disposes of the shares after compliance with the holding period requirement described above, the Company will not be entitled
to a federal income tax deduction since the holder will not have realized any ordinary income in the transaction.
Prior
to the Tax Cuts and Jobs Act of 2017 (“TCJA”), Section 162(m) of the Internal Revenue Code generally disallowed a tax deduction
to publicly held companies for compensation paid to certain executive officers in excess of $1 million per officer in any year that did
not qualify as performance-based. Under the TCJA, the performance-based exception has been repealed and the $1 million deduction limit
now applies to anyone serving as the chief executive officer or the chief financial officer at any time during the taxable year and the
top three other highest compensated executive officers serving at any fiscal year-end.
Stock
Subject to the 2023 Plan
As
of January 22, 2025, there were no shares previously issued or subject to outstanding awards under the 2023 Plan. All 7,000,000 shares
are available for future issuance under the 2023 Plan.
2013
Equity Incentive Plan
Plan
Purpose
Our
Board adopted the 2013 Plan, which terminated on March 15, 2023, to (1) encourage selected employees, officers, directors, consultants
and advisers to improve our operations and increase our profitability, (2) encourage selected employees, officers, directors, consultants
and advisers to accept or continue employment or association with us, and (3) increase the interest of selected employees, officers,
directors, consultants and advisers in our welfare through participation in the growth in value of our common stock. All of our current
employees, officers, directors and consultants were eligible to participate in the 2013 Plan.
Administration
The
2013 Plan is administered by the Board or by a committee to which administration of the Plan, or of part of thereof, is delegated by
the Board. The 2013 Plan is currently administered by our Compensation Committee, which we refer to below as the “Administrator.”
The Administrator is responsible for selecting the officers, employees, directors, consultants and advisers who will receive Options,
Stock Appreciation Rights and Stock Awards. Subject to the requirements imposed by the 2013 Plan, the Administrator is also responsible
for determining the terms and conditions of each Option and Stock Appreciation Right award, including the number of shares subject to
the Option, the exercise price, expiration date and vesting period of the Option and whether the option is an Incentive Option or a Non-Qualified
Option. Subject to the requirements imposed by the 2013 Plan, the Administrator is also responsible for determining the terms and conditions
of each Stock Award, including the number of shares granted, the purchase price (if any), and the vesting, transfer and other restrictions
imposed on the stock. The Administrator has the power, authority and discretion to make all other determinations deemed necessary or
advisable for the administration of the 2013 Plan or of any award under the 2013 Plan.
The
2013 Plan is not subject to the Employee Retirement Income Security Act of 1974 and is not a qualified pension, profit sharing or bonus
plan under Section 401(a) of the Internal Revenue Code.
Stock
Subject to the 2013 Plan
As
of January 22, 2025, there were 76,342 shares previously issued or subject to outstanding awards under the 2013 Plan. The plan expired
on March 15, 2023 and therefore there are no shares available for future issuance under the 2013 Plan.
Vesting
Each
Option, Stock Appreciation Right or Stock Award will become exercisable or non-forfeitable (that is, “vest”) under conditions
specified by the Administrator at the time of grant. Vesting typically is based upon continued service as a director or employee but
may be based upon any performance criteria and other contingencies that are determined by the Administrator. Shares subject to Stock
Awards may be subject to specified restrictions concerning transferability, repurchase by the Company and forfeiture of the shares issued,
together with such other restrictions as may be determined by the Administrator.
Expiration
Date
Each
Option or Stock Appreciation Right must be exercised by a date specified in the award agreement, which may not be more than ten years
after the grant date. Except as otherwise provided in the relevant agreement, an Option or Stock Appreciation Right ceases to be exercisable
ninety days after the termination of the holder’s service with us.
Transfers
of Options
Unless
otherwise determined by the Administrator, Options are not transferable except by will or the laws of descent and distribution.
Purchase
Price Payment
Unless
otherwise determined by the Administrator, the purchase price of common stock acquired under the 2013 Plan is payable by cash or check
at the time of an Option exercise or acquisition of a Stock Award. The Company does not charge participants any fees or commissions in
connection with their acquisition of common stock under the 2013 Plan. The Administrator also has discretion to accept the following
types of payment from participants:
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A
secured or unsecured promissory note, provided that this method of payment is not available to a participant who is a director or
an executive officer; |
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Shares
of our Common Stock already owned by the Option or Stock Award holder as long as the surrendered shares have a fair market value
that is equal to the acquired stock and have been owned by the participant for at least six months; |
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The
surrender of shares of Common Stock then issuable upon exercise of an Option; and |
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A
“cashless” option exercise in accordance with applicable regulations of the SEC and the Federal Reserve Board. |
Withholding
Taxes
At
the time of his or her exercise of an Option or Stock Appreciation Right, an employee is responsible for paying all applicable federal
and state withholding taxes. A holder of Stock Awards is responsible for paying all applicable federal and state withholding taxes once
the shares covered by the award cease to be forfeitable or at any other time required by applicable law.
Securities
Law Compliance
Shares
of common stock will not be issued pursuant to the exercise of an Option or the receipt of a Stock Award unless the Administrator determines
that the exercise of the Option or receipt of the Stock Award and the issuance and delivery of such shares will comply with all relevant
provisions of law, including, without limitation, the Securities Act, applicable state and foreign securities laws and the requirements
of any stock exchange on which our common stock is traded.
Effects
of Certain Corporate Transactions
Except
as otherwise determined by the Administrator, in the event of a “corporate transaction,” all previously unexercised Options
and Stock Appreciation Rights will terminate immediately prior to the consummation of the corporate transaction and all unvested Restricted
Stock awards will be forfeited immediately prior to the consummation of the corporate transaction. The Administrator, in its discretion,
may permit exercise of any Options or Stock Appreciation Rights prior to their termination, even if those awards would not otherwise
have been exercisable, or provide that outstanding awards will be assumed or an equivalent Option or Stock Appreciation Right substituted
by a successor corporation. The Administrator, in its discretion, may remove any restrictions as to any Restricted Stock awards or provide
that all outstanding Restricted Stock awards will participate in the corporate transaction with an equivalent stock substituted by the
successor corporation subject to the restrictions. In general, a “corporate transaction” means:
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Our
liquidation or dissolution; |
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Our
merger or consolidation with or into another corporation as a result of which we are not the surviving corporation; |
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A
sale of all or substantially all of our assets; or |
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A
purchase or other acquisition of more than 50% of our outstanding stock by one person, or by more than one person acting in concert. |
Other
Adjustment Provisions
If
the stock of the Company is changed by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination or
reclassification, appropriate adjustments shall be made by the Administrator, in its discretion, in (1) the number and class of shares
of stock subject to the 2013 Plan and each Option and grant of Stock Awards outstanding under the 2013 Plan, and (2) the purchase price
of each outstanding Option and (if applicable) Stock Award.
Termination
of the Plan
The
2013 Plan terminated automatically on March 15, 2023, which was the tenth anniversary of the date of the 2013 Plan’s adoption by
our Board.
2020
Stock Appreciation Rights Plan
On
June 23, 2020, our Board of Directors adopted the Company’s 2020 Stock Appreciation Rights Plan (the “Plan”).
The purposes of the Plan are to: (i) enable the Company to attract and retain the types of employees, consultants, and directors (collectively,
“Service Providers”) who will contribute to the Company’s long-range success; (ii) provide incentives that align the
interests of Service Providers with those of the stockholders of the Company; and (iii) promote the success of the Company’s business.
The Plan only provides for incentive awards that are only made in the form of stock appreciation rights payable in cash. No shares of
common stock were reserved in connection with the adoption of the Plan since no shares will be issued pursuant to the Plan.
Plan
Administration
The
Plan will be administered by the Compensation Committee of the Board or, in the Board’s sole discretion, by the Board. The Compensation
Committee will have the authority to, among other things, (i) construe and interpret the Plan and apply its provisions; (ii) promulgate,
amend, and rescind rules and regulations relating to the administration of the Plan; (iii) delegate its authority to one or more persons
who is an officer of the Company within the meaning of Section 16 of the Exchange Act, and the rules and regulations promulgated thereunder
with respect to SARs that do not involve “insiders” within the meaning of Section 16 of the Exchange Act; (iv) determine
when SARs are to be granted under the Plan and the applicable grant date; (v) prescribe the terms and conditions of each SAR, including,
without limitation, the exercise price and medium of payment and vesting provisions, and to specify the provisions of the SAR Agreement
relating to such grant; (vi) amend any outstanding SARs, subject, in certain cases, to the participant’s consent; and (vii) make
all other determinations which may be necessary or advisable for the administration of the Plan.
Eligible
Participants
SARs
may be granted only to persons who are Service Providers, and those persons whom the Committee determines are reasonably expected to
become Service Providers following the grant date. The Committee may from time to time designate those Service Providers, if any, to
be granted SARs under the Plan, the number of SARs which will be granted to each such person, and any other terms or conditions relating
to SARs as it may deem appropriate to the extent consistent with the provisions of the Plan. A participant who has been granted a SAR
may, if otherwise eligible, be granted additional incentive awards at any time.
Grant.
The Committee may grant SARs to any Service Provider. An SAR is the right to receive an amount equal to the Spread with respect to a
share of the Company’s common stock upon the exercise of the SAR. The “Spread” is the difference between the exercise
price per share specified in a SAR agreement on the date of grant and the fair market value per share on the date of exercise of the
SAR.
General
Provisions. The terms and conditions of each SAR will be evidenced by a SAR agreement. The exercise price per share will not be less
than 100% of the fair market value of a Share on the date of grant of the SAR. The term of the SAR will be determined by the Committee
but may not be greater than ten years from the date of grant.
Exercise.
SARs are exercisable subject to such terms and conditions as the Committee may specify in the SAR agreement for the SAR. A SAR may be
exercised by the delivery of a signed written notice of exercise to the Company, which must be received and accepted by the Company as
of a date set by the Company in advance of the effective date of the proposed exercise. The notice must set forth the number of SARs
being exercised, together with any additional documents the Company may require.
Settlement.
Upon exercise of a SAR, the Grantee will receive an amount equal to the Spread. The Spread, less applicable withholdings, will be payable
only in cash. In no event may any SAR be settled in any manner other than by delivery of a cash payment from the Company.
Form
of SAR Agreement
Each
participant to whom a SAR is granted will be required to enter into a SAR agreement with the Company, in such a form as is provided by
the Committee. The SAR agreement will contain specific terms as determined by the Committee, in its discretion, with respect to the participant’s
particular SAR. Such terms need not be uniform among all participants or any similarly situated participants. The SAR agreement may include,
without limitation, vesting, forfeiture and other provisions particular to the particular participant’s SAR, as well as, for example,
provisions to the effect that the participant must abide by all the terms and conditions of the Plan and such other terms and conditions
as may be imposed by the Committee. A SAR will include such terms and conditions as are determined by the Committee, in its discretion,
to be appropriate with respect to any participant.
The
Committee may specify in a SAR agreement that the participant’s rights, payments, and benefits with respect to a SAR will be subject
to forfeiture upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions
of the incentive award. Such events may include, but are not limited to, termination with cause or other conduct by the participant that
is detrimental to the business or reputation of the Company.
Termination
of Employment
Unless
otherwise expressly provided in the participant’s SAR agreement, if the participant’s employment is terminated for any reason
other than due to cause, death or disability, any non-vested portion of any outstanding SAR at the time of such termination will automatically
expire and terminate and no further vesting will occur after the termination date. In such event, except as otherwise expressly provided
in the SAR agreement, the participant will be entitled to exercise such participant’s rights only with respect to the portion of
the SAR that was vested as of the termination date for a period that will end on the earlier of (i) the expiration date set forth in
the SAR agreement or (ii) ninety days after the date of termination.
Termination
for Cause
Unless
otherwise expressly provided in the participant’s SAR agreement, in the event of the termination of a participant’s employment
for cause, all vested and non-vested SARs granted to such participant will immediately expire and will not be exercisable to any extent.
Disability
or Death
Unless
otherwise expressly provided in the participant’s SAR agreement, upon termination of employment as a result of the participant’s
disability or death, (i) any non-vested portion of any outstanding SAR will immediately terminate upon termination and no further vesting
will occur, and (ii) any vested SAR will expire on the earlier of either (A) the expiration date set forth in the SAR agreement or (B)
12 months following the participant’s termination of employment.
Continuation
Subject
to the conditions and limitations of the Plan and applicable law, in the event that a participant ceases to be an employee, outside director
or consultant, as applicable, for whatever reason, the Committee and participant may mutually agree with respect to any outstanding SAR
then held by the participant (i) for an acceleration or other adjustment in any vesting schedule applicable to the SAR award; (ii) for
a continuation of the exercise period following termination for a longer period than is otherwise provided under such SAR; or (iii) to
any other change in the terms and conditions of the SAR. In the event of any such change to an outstanding SAR, a written amendment to
the participant’s SAR agreement will be required. No amendment to a participant’s SAR will be made to the extent compensation
payable pursuant thereto as a result of such amendment would be considered deferred compensation that is not excepted from taxation or
penalties under Code Section 409A, unless otherwise determined by the Committee.
SARs
granted under the Plan are not transferable other than to a designated beneficiary upon the Participant’s death or by will or the
laws of descent and distribution.
Change
in Control
Unless
otherwise provided in a SAR Agreement, notwithstanding any contrary provision in the Plan, in the event of a Change in Control (as defined
in the Plan), all outstanding SARs will become 100% vested and immediately exercisable. The closing of the Acquisition will not result
in an immediate Change in Control under the Plan. Depending on the achievement of future milestones under the Exchange Agreement and
other changes in the outstanding shares of our common stock, the issuance of the Contingent Shares might constitute a Change in Control
at that time.
Amendment
The
Board at any time, and from time to time, may amend or terminate the Plan. The Committee at any time, and from time to time, may amend
the terms of any one or more SAR agreements, except that the Committee may not affect any amendment which would otherwise constitute
an impairment of the rights under any SAR unless the participant consents in writing.
As
of January 22, 2025, there were 40,223 SARs outstanding under the 2020 Plan, giving effect the 1-for-20 reverse stock split effected
on September 22, 2023.
PAY
VERSUS PERFORMANCE
The
following information is presented about the relationship between executive compensation actually paid (“CAP”) and certain
financial performance of the Company as required by SEC rules. The Company’s executive compensation program is discussed above
under “Summary of Named Executive Officer Compensation.”
| Year | |
Summary Compensation Table Total for PEO A (1) | | |
Summary Compensation Table Total for PEO B (1) | | |
Compensation Actually Paid to PEO A (2) | | |
Compensation Actually Paid to PEO B (2) | | |
Average Summary Compensation Table Total for Non-PEO NEO’s (3) | | |
Average Compensation Actually Paid to Non-PEO NEO’s (2) | | |
Value of Initial Fixed $100 Investment Based on Total Shareholder Return (4) | | |
Net Loss (5) | |
| 2024 | |
$ | 442,000 | | |
$ | 481,344 | | |
$ | 442,000 | | |
$ | 383,394 | | |
$ | 254,537 | | |
$ | 168,740 | | |
$ | 6.56 | | |
$ | (7,339,276 | ) |
| 2023 | |
$ | 417,500 | | |
$ | 727,861 | | |
$ | 417,500 | | |
$ | 344,584 | | |
$ | 306,485 | | |
$ | 108,312 | | |
$ | 26.10 | | |
$ | (5,033,496 | ) |
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(1) |
The
amounts presented reflect the total compensation set forth in the Summary Compensation Table (“SCT”) for the Company’s
Chief Executive Officer, William Kerby (PEO A), our former Chief Executive Officer, and Jacob Brunsberg (PEO B), who served
as the Company’s PEO until December 29, 2023. |
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(2) |
The
following table reflects the adjustments prescribed by SEC rules to calculate the CAP from those total amounts reflected in the SCT.
The SCT amounts and the CAP amounts do not reflect the actual amount of compensation earned by or paid to the Company’s executives
during the applicable years, but rather are amounts determined in accordance with Item 402 of Regulation S-K under the Exchange Act. |
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2024 | | |
2023 | |
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PEO A | | |
PEO B | | |
Other NEO’s | | |
PEO A | | |
PEO B | | |
Other NEO’s | |
| SCT Amounts | |
$ | 442,000 | | |
$ | 481,344 | | |
$ | 254,537 | | |
$ | 417,500 | | |
$ | 727,861 | | |
$ | 306,485 | |
| Adjustments Related to Defined Benefit and Actuarial Plans: | |
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| None (6) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Adjustments Related to Stock Based Compensation | |
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| Values reported in Stock Awards and Options awards columns of the SCT | |
| - | | |
| - | | |
| - | | |
| - | | |
| (477,861 | ) | |
| (130,488 | ) |
| Year-End Fair Value of Awards Granted during the year that are outstanding and unvested as of the end of the covered fiscal year | |
| - | | |
| - | | |
| - | | |
| - | | |
| 217,862 | | |
| 74,907 | |
| Decrease in Fair Value of Awards granted in prior years that are outstanding and unvested at Year End | |
| - | | |
| - | | |
| (74,095 | ) | |
| - | | |
| (391,449 | ) | |
| (147,035 | ) |
| Fair Value on Vesting Date of Awards that are granted and vest in the same covered fiscal year | |
| - | | |
| - | | |
| - | | |
| - | | |
| 308,841 | | |
| 32,618 | |
| Increase (Decrease) in Fair Value of Awards granted in prior years that vest in the covered fiscal year | |
| - | | |
| (97,950 | ) | |
| (11,702 | ) | |
| - | | |
| (40,669 | ) | |
| (28,176 | ) |
| Increase (Decrease) in fair value of awards granted in prior years that failed to meet vesting conditions during the year | |
| - | | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
| Dividends and other earnings paid on awards before the vesting date | |
| - | | |
| - | | |
| - | | |
| - | | |
| | | |
| - | |
| CAP Amounts | |
$ | 442,000 | | |
$ | 383,394 | | |
$ | 168,740 | | |
$ | 417,500 | | |
$ | 344,584 | | |
$ | 108,312 | |
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(3) |
The
amounts presented reflect the average compensation set forth in the SCT for the Company’s Non-PEO NEOs, consisting of Frank
Orzechowski and Lyndsey North for the fiscal years ended February 29, 2024 and February 28, 2023. |
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|
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(4) |
The
amounts presented reflect the value of a fixed investment of $100 on March 1st of the reporting period (i.e., March 1, 2022)
based upon the closing market price of the Company’s common stock of $45.60, $11.90 and $2.99 at February
29, 2024, February 28, 2023 and February 28, 2022, respectively, as traded on The Nasdaq Capital Market. All amounts presented herein
have been retroactively adjusted to reflect the 1-for-20 reverse split of the Company’s common stock effective September 22,
2023. |
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(5) |
The
amounts presented reflect the net loss as reported in the Company’s audited financial statements for the periods presented. |
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|
|
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(6) |
The
Company had no Defined Benefit or Actuarial Plans during the periods presented. |
Analysis
of Information Presented in the Pay Verses Performance Table
The
Company is providing the following descriptions of the relationships between information presented in the Pay Versus Performance table,
including CAP, as required by Item 402(v) of Regulation S-K under the Exchange Act.
The
Compensation Committee does not use TSR or net income (loss) in its compensation programs. However, the Compensation Committee does utilize
several other performance measures that it considers appropriate under the circumstances, including Company market capitalization, actual
performance vs. budget and quarterly forecasts, customer success and capital raising efforts, in order to align executive compensation
with the Company’s business and performance objectives.
Compensation
actually paid to the Company’s PEO A increased by $24,500 in 2024 as compared to 2023 due to an increase in
compensation paid for personal credit card guarantees and an increase of his automobile allowance. For 2024, PEO A was paid a
salary of $400,000, of which $285,000 was paid in cash and $115,000 was deferred, and earned $24,000 as compensation for
personal financial guarantees on Company credit cards, the payment of which was deferred, and an automobile allowance of $18,000,
the payment of which was deferred. Compensation actually paid to PEO B increased by $38,810 in 2024 as compared to 2023
due to a retention bonus of $204,511, and severance of $62,500, partially offset by a decrease in base salary related to his
resignation on December 29, 2023 as well as a 74.9% decrease in the price of the Company’s common stock which resulted in
decreases in the fair value of awards that granted in prior years that were outstanding and unvested at year end as well as a
decrease in the fair value of awards granted in prior years that vested in 2024. For 2024, PEO B was paid a salary of $214,333 in
cash. In addition, as noted above, PEO B received a retention bonus of $204,511 and severance of $62,500 pursuant to his
Separation Agreement related to his resignation from the Company on December 29, 2023. In addition, PEO B is entitled to receive an
award of 31,250 shares of restricted common stock or restricted stock units, or a stock option to purchase up to 31,250 shares of
the Company’s common stock. For 2023, PEO A was paid a salary of $400,000, of which 336,500 was paid in cash and $63,500
was deferred, and earned compensation of $10,000 for personal financial guarantees on Company credit cards, which was
deferred, and an automobile allowance of $7,500, which was also deferred. For 2023, PEO B was paid a salary of $250,000
in cash, and was awarded stock options to purchase up to 8,707 shares of common stock as well as 18,845 SARs.
Average
compensation actually paid to the Company’s non-PEO NEOs increased by $60,428 in 2024 as compared to 2023 primarily a
retention bonus paid in 2024, partially offset by a 79.4% decrease in the price of the Company’s common stock, which resulted
in decreases in the fair value of awards granted in prior years that were outstanding and vested and unvested at February 29, 2024, as
well as a decrease in the fair value of awards granted in prior years that vested during 2024. For 2024, the Company’s
two non-PEO NEO’s were paid salaries of $400,000 in cash and the aforementioned retention bonus of $109,073. For 2023, the
Company’s two non-PEO NEO’s were paid salaries in cash of $351,995, and received stock options to purchase 7,117 shares of
common stock and 8,326 SARs.
TSR
represents a cumulative loss in value of 93.4% for the two years ended February 29, 2024, and a loss in value of 79.9% for the year ended
February 28, 2023. Net loss increased by $2,305,780 in 2024 as compared to 2023.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
following tables set forth certain information regarding beneficial ownership of our common stock, Series H Preferred and Series I Preferred
as of January 22, 2025 (a) by each person known by us to own beneficially 5% or more of the outstanding shares of each class of the outstanding
securities, (b) by our named executive officers and each of our directors (and director nominees) and (c) by all executive officers and
directors of the Company as a group.
As
of January 22, 2025, there were 1,592,738 shares of Company common stock outstanding, 33,000 shares of Series H Preferred outstanding,
and 126,204 shares of Series I Preferred outstanding.
In
addition to the foregoing, as of January 22, 2025, there were (i) 316 shares of the Company’s Series E Preferred outstanding, which,
including accrued dividends thereon, were convertible into an aggregate of 3,310 shares of Company common stock; (ii) 297,788 shares
of Series J Preferred outstanding; (iii) 60,595 shares of Series K Preferred outstanding (iv) 579,469 shares of Series L Preferred outstanding;
(v) and 133,278 shares of Series M Preferred Stock outstanding. The Series E, J, K, L and M Preferred do not have any voting rights and
therefore are not included in a separate table below.
In
computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, shares of
common stock subject to stock options, warrants, convertible preferred stock or other rights held by such person that are currently convertible
or exercisable or will become convertible or exercisable within 60 days of January 22, 2025 are considered outstanding, although these
shares are not considered outstanding for purposes of computing the percentage ownership of any other person.
We
believe, based on information provided to us, that each of the stockholders listed below has sole voting and investment power with respect
to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable.
Common
Stock
| Name of Beneficial Owner | |
Number of Shares
Beneficially Owned | | |
Percentage of Shares
Beneficially Owned(1) | |
| Named Executive Officers and Directors: | |
| | | |
| | |
| William Kerby(2) | |
| 50,011 | | |
| 3.1 | % |
| Frank Orzechowski(3) | |
| 11,376 | | |
| * | |
| Donald P. Monaco(4) | |
| 41,745 | | |
| 2.6 | % |
| Jacob Brunsberg(5) | |
| 17,302 | | |
| 1.1 | % |
| Salvatore Battinelli(6) | |
| 6,069 | | |
| * | |
| Dennis Duitch(7) | |
| 5,767 | | |
| * | |
| Kent J. Summers(8) | |
| 5,730 | | |
| * | |
| All executive officers and directors as a group (7 persons)(9) | |
| 138,000 | | |
| 8.4 | % |
| 5% Stockholders: | |
| | | |
| | |
| Promethean TV, Inc. (10) | |
| 100,000 | | |
| 6.3 | % |
| David Jiang (11) | |
| 161,843 | | |
| 9.9 | % |
*Less
than 1%.
| |
(1) |
Based
on 1,592,738 shares outstanding at January 22, 2025. |
| |
|
|
| |
(2) |
Includes
11,386 shares held by Travel and Media Tech, LLC (“TMT”). Mr. Kerby is a 50% member of TMT, and is deemed to beneficially
own the shares held by TMT. Mr. Kerby disclaims beneficial ownership of all securities held by TMT in excess of his pecuniary interest,
if any. |
| |
|
|
| |
(3) |
Includes
11,328 shares issuable upon the exercise of stock options. |
| |
|
|
| |
(4) |
Includes
(i) 1,733 shares held by Monaco Investment Partners, LP (“MIP”); (ii) 28,626 shares held by the Donald P. Monaco Insurance
Trust (the “Trust”); and (iii) 11,386 shares held by TMT. Mr. Monaco is the managing general partner of MI Partners,
is the trustee of the Trust and is a 50% member of TMT, and as such is deemed to beneficially own the securities held by the MI Partners,
Trust and TMT, respectively. Mr. Monaco disclaims beneficial ownership of all securities held by MIP, the Trust and TMT in excess
of his pecuniary interest, if any. |
| |
|
|
| |
(5) |
Includes
17,207 shares issuable upon the exercise of stock options. |
| |
|
|
| |
(6) |
Includes
(i) 5,105 shares issuable upon the exercise of stock options, (ii) 175 shares issuable upon the conversion of shares of the Company’s
Series E Preferred Stock, and (iii) 122 shares issuable upon exercise of Class A Warrants. |
| |
|
|
| |
(7) |
Includes
5,105 shares issuable upon the exercise of stock options. |
| |
|
|
| |
(8) |
Includes
5,105 shares issuable upon the exercise of stock options. |
| |
|
|
| |
(9) |
Includes
(i) 43,850 shares issuable upon the exercise of stock options, (ii) 175 shares issuable upon the conversion of the shares of the
Company’s Series E Preferred Stock, and (iii) 122 shares issuable upon exercise of Class A Warrants. |
| |
|
|
| |
(10) |
Mr.
Ian Sharpe is the control party of Promethean TV, Inc., and as such is deemed to beneficially own the securities held by Promethean
TV, Inc. Mr. Sharpe disclaims beneficial ownership of all securities held by Promethean TV, Inc. in excess of his pecuniary interest,
if any. |
| |
|
|
| |
(11) |
Includes
27,800 shares issuable upon the conversion of Series I Preferred. |
Series
H Preferred
None
of the Company’s officers or directors beneficially own any shares of the outstanding shares of Series H Preferred, and therefore
have been excluded from the following table.
| Name of Beneficial Owner | |
Number of Shares
Beneficially Owned | | |
Percentage of Shares
Beneficially Owned(1) | |
| 5% Beneficial Owners: | |
| | | |
| | |
Procopio Cory Hargreaves & Savitch LLP
c/o NextTrip, Inc. | |
| 33,000 | | |
| 100.0 | % |
| |
(1) |
Based
on 33,000 shares of Series H Preferred outstanding at January 22, 2025. |
Series
I Preferred
None
of the Company’s officers or directors beneficially own any shares of the outstanding shares of Series I Preferred, and therefore
have been excluded from the following table.
| Name of Beneficial Owner(1) | |
Number of Shares
Beneficially Owned | | |
Percentage of Shares
Beneficially Owned(1) | |
| 5% Beneficial Owners: | |
| | | |
| | |
David Jiang
c/o NextTrip, Inc. | |
| 96,403 | | |
| 76.4. | % |
Greg Romsdahl
c/o NextTrip, Inc. | |
| 24,834 | | |
| 19.7 | % |
| |
(1) |
Based
on 126,204 shares of Series I Preferred outstanding at January 22, 2025. |
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires the Company’s executive officers and directors, and persons who own more than 10% of a registered
class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. Executive officers,
directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
The
Company believes that during the fiscal year ended February 29, 2024, its executive officers, directors and greater than 10% stockholders
timely filed all reports under Section 16(a).
Equity
Compensation Plan Information
The
following table provides certain information with respect to our equity compensation plans as of February 29, 2024.
| Plan Category | |
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | |
Weighted- average Exercise Price of Outstanding Options, Warrants and Rights | | |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |
| | |
(a) | | |
(b) | | |
(c) | |
| | |
| | |
| | |
| |
| 2023 Equity Incentive Plan(1) | |
| - | | |
| - | | |
| 7,000,000 | |
| 2013 Equity Incentive Plan(2) | |
| 82,800 | | |
$ | 55.56 | | |
| - | |
| Equity compensation plans not approved by security holders(3) | |
| - | | |
$ | 2.21 | | |
| - | |
| Chief Executive Officer Inducement Options(4) | |
| 2,500 | | |
$ | 224.00 | | |
| - | |
| (1) | On
November 19, 2023, the Board adopted the 2023 Plan, which was approved by our stockholders
on December 28, 2023. |
| (2) | On
March 15, 2013, the Board adopted the 2013 Plan. The 2013 Plan was approved by our stockholders
on October 10, 2013. The 2013 Plan automatically expired on March 15, 2023, which was the
tenth anniversary of the adoption of the 2013 Plan. |
| (3) | On
June 23, 2020, our Board adopted the Company’s 2020 Stock Appreciation Rights
Plan (the “SAR Plan”). The purposes of the SAR Plan are to: (i) enable the Company
to attract and retain the types of employees, consultants, and directors who will contribute
to the Company’s long-range success; (ii) provide incentives that align the interests
of Service Providers with those of the shareholders of the Company; and (iii) promote the
success of the Company’s business. The SAR Plan only provides for incentive awards
in the form of SARs. No shares of common stock are reserved in connection with the adoption
of the SAR Plan since no shares will be issued pursuant to the SAR Plan. As of February 29,
2024, the Company had 40,390 SARs outstanding under the SAR Plan. |
| (4) | On
December 3, 2019, in conjunction with the hiring of Mark K. Ruport, the Company’s former
President and Chief Executive Officer, the Company granted to Mr. Ruport (i) an option to
purchase 500 shares of our common stock with an exercise price of $224.00, which fully vested
and became exercisable on January 3, 2020; and (ii) an option to purchase up to 2,000 shares
of our common stock, with an exercise price of $224.00, which fully vested and became exercisable
on December 3, 2022. In accordance with Nasdaq Listing Rule 5635(c)(4), such options were
granted to Mr. Ruport as an inducement award outside of the 2013 Plan. As of February 29,
2024, such inducement shares were subject to an exercisability waiver until such time as
the Company received shareholder approval to increase its authorized common shares from 1,200,000
to 250,000,000 shares. Such approval was obtained at a special meeting of stockholders on
March 8, 2024. |
TRANSACTIONS
WITH RELATED PERSONS
Except
as described below in this section, since the beginning of our last fiscal year, there has not been, nor is there currently proposed,
any transaction or series of similar transactions to which we were a party other than equity and other compensation, termination, change
in control and other arrangements, which are described under “Executive Compensation” and “Director Compensation”
above:
| |
● |
in
which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed
fiscal years; and |
| |
|
|
| |
● |
in
which any director, executive officer, or other stockholder of more than 5% of our common stock or any member of their immediate
family had or will have a direct or indirect material interest. |
Related
Party Loans to Company
On
February 29, 2024, NextTrip Holdings, Inc. (“Holdings”), a wholly owned subsidiary of the Company, issued an unsecured promissory
note, in the principal amount of $391,776.54, to William Kerby, to memorialize the terms and conditions of certain working capital advances
made by Mr. Kerby to Holdings. The promissory note accrued interest at a rate equal to 7.5% simple interest per annum, and was scheduled
to automatically mature and become due and payable in full on February 28, 2025, subject to certain limited exceptions. The promissory
note, or any portion thereof, could be prepaid by Holdings without any penalty. Mr. Kerby serves as Chief Executive Officer of both the
Company and Holdings. The promissory note was approved by the Board, including all independent members thereof. On December 31, 2024,
the full outstanding balance of the note ($321,257) was converted into shares of our Series L Preferred.
On
March 18, 2024, Holdings entered into an unsecured promissory note for a line of credit with Donald Monaco and William Kerby, the Company’s
Chairman of the Board and Chief Executive Officer, respectively, for the aggregate principal amount of $500,000 with an initial advance
of $125,000, provided that the aggregate principal amount of the note does not exceed $500,000 at any time. Under the terms of the note,
advances under the line of credit may be made at the Company’s request until August 31, 2024. The note bears an annual interest
rate of 7.5% and matures on February 28, 2025, and may be prepaid by the Company at any time prior to maturity without penalty. The promissory
note was approved by the Board, including the independent members thereof. On December 31, 2024, $453,743 of the outstanding principal
balance of $467,892 was converted into shares of Series L Preferred. As of January 22, 2025, the remaining outstanding principal balance
of the note is $14,149.
On
April 23, 2024, the Board approved Holdings to enter into a series of unsecured promissory notes with certain related parties, including
investors, directors, officers and employees, who may individually provide funds for the aggregate principal amount of $1,000,000. The
notes bear an annual interest rate of 7.5% and shall mature one year from the date of each note’s execution, and may be prepaid
by Holdings at any time prior to maturity without penalty. On August 14, 2024, at a joint meeting of the Audit Committee and the Board,
the directors unanimously approved an increase in the principal amount of the related party line of credit to $2,000,000 on the same
terms and conditions as previously approved. On December 31, 2024, $570,000 of the outstanding principal balance of $1,714,863 was converted
into shares of Series L Preferred. As of January 22, 2025, the remaining outstanding principal balance of the note is $1,144,863.
On
May 21, 2024, Holdings issued an unsecured promissory note, in the principal amount of $455,000, to Mr. Monaco. The promissory note accrued
interest at a rate equal to 7.5% simple interest per annum, and was scheduled to automatically mature and become due and payable in full
on February 28, 2025, subject to certain limited exceptions. The promissory note, or any portion thereof, could be prepaid by Holdings
without any penalty. The promissory note was approved by the Board, including the independent members thereof. On December 31, 2024,
the full outstanding balance of the note ($455,000) was converted into shares of our Series L Preferred.
The
following table summarizes the principal amounts outstanding as of January 22, 2025 by promissory note date and related party:
| Promissory Note Date | |
Name | |
Title | |
Principal Amount Outstanding at January 22, 2025 | |
| February 29, 2024 | |
William Kerby | |
Chief Executive Officer | |
$ | - | |
| | |
| |
| |
| | |
| March 18, 2024 | |
William Kerby | |
Chief Executive Officer | |
$ | 14,149 | |
| | |
Donald P. Monaco | |
Chairman | |
$ | - | |
| | |
| |
| |
$ | 14,149 | |
| | |
| |
| |
| | |
| April 23, 2024 | |
William Kerby | |
Chief Executive Officer | |
$ | 21,515 | |
| | |
Donald P. Monaco | |
Chairman | |
$ | 1,035,000 | |
| | |
Gregory Miller | |
Executive Vice-President | |
$ | 88,348 | |
| | |
| |
| |
$ | 1,144,863 | |
| | |
| |
| |
| | |
| May 21, 2024 | |
Donald P. Monaco | |
Chairman | |
$ | - | |
| | |
| |
| |
| | |
| Total | |
| |
| |
$ | 1,159,012 | |
The
repayment of related party loans, to the extent not limited by any contractual terms, is subject to review and approval by the Audit
Committee which consists of independent directors which are not parties to the aforementioned related party loans.
Indemnification
Agreements
We
have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things,
require us to indemnify each director and executive officer to the fullest extent permitted by Nevada law, including indemnification
of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any
action or proceeding, including any action or proceeding by or in the right of us, arising out of the person’s services as a director
or executive officer, including in connection with the Acquisition and related matters.
Policies
and Procedures for Related Person Transactions
Our
Audit Committee is responsible for reviewing and approving, as appropriate, all transactions with related persons (other than compensation-related
matters, which should be reviewed by our Compensation Committee), in accordance with its Charter and the Nasdaq marketplace rules. In
reviewing and approving any such transactions, our Audit Committee is tasked to consider all relevant facts and circumstances, including,
but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction
and the extent of the related person’s interest in the transaction.
INTERESTS
OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except
as otherwise specified in each of the above proposals, and the extent of their ownership in shares of our common stock and securities
convertible or exercisable for common stock, none of our directors, executive officers, any person who has served as a director or executive
officer since the beginning of the last fiscal year, or their associates have any interest, direct or indirect, by security holdings
or otherwise, in any of the matters to be acted upon at the Annual Meeting as described in this proxy statement.
OTHER
MATTERS
Accompanying
this Proxy Statement is a copy of our Annual Report on Form 10-K, without exhibits, for the fiscal year ended December February 29, 2024,
as filed with the SEC, which constitutes our annual report to stockholders. We will provide, without charge upon written request, a further
copy of our Annual Report, including the financial statements and the financial statement schedules. Copies of the Form 10-K exhibits
also are available without charge. Stockholders who would like such copies should direct their requests in writing to: Corporate Secretary,
3900 Paseo del Sol, Santa Fe, New Mexico 87507.
As
of the date of this Proxy Statement, the Board knows of no matters that will be presented for consideration at the Annual Meeting other
than as described in this proxy statement. If any other matters properly come before the Annual Meeting or any adjournment or postponement
of the meeting and are voted upon, your proxy will confer discretionary authority on the individuals named as proxy holders to vote the
shares represented by the proxy as to any other matters.
MISCELLANEOUS
The
Company will bear all costs incurred in the solicitation of proxies. In addition to solicitation by mail, our officers and employees
may solicit proxies by telephone, the Internet or personally, without additional compensation. We may also make arrangements with proxy
solicitation firms, brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the
beneficial owners of shares of our common stock, Series H Preferred and/or Series I Preferred held of record by such persons, and we
may pay fees and/or reimburse such proxy solicitation firms, brokerage houses and other custodians, nominees and fiduciaries for their
out-of-pocket expenses incurred in connection therewith.
The
SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements
with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders.
This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and
cost savings for companies. The Company and some brokers household proxy materials and may deliver a single proxy statement to multiple
stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received
notice from your broker or the Company that they or the Company will be householding materials to your address, householding will continue
until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding
and would prefer to receive a separate copy of our proxy materials, please notify your broker if your shares are held in a brokerage
account or the Company if you hold registered shares of common stock, Series H Preferred or Series I Preferred. We will also deliver
a separate copy of this proxy statement to any stockholder upon written request. Similarly, stockholders who have previously received
multiple copies of disclosure documents may write to the address or call the phone number listed below to request delivery of a single
copy of these materials in the future. You can notify the Company by sending a written request to NextTrip, Inc., 3900 Paseo del Sol,
Santa Fe, New Mexico 87507, Attn: Secretary, by registered, certified or express mail or by calling the Company at (203) 733-1356.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. Stockholders may
obtain free copies of certain documents filed with the SEC by the Company through the “SEC Filings” section of our website.
You also may obtain any of the documents we file with the SEC, including exhibits to the documents, without charge, by requesting them
in writing or by telephone at the following address or telephone number:
NextTrip,
Inc.
3900
Paseo del Sol
Santa
Fe, New Mexico 87507
(203)
733-1356
| By
Order of the Board of Directors |
|
| |
|
| |
|
| William
Kerby |
|
| Chief
Executive Officer |
|
PROXY
NEXTTRIP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF OUR BOARD OF
DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON FEBRUARY 27, 2025
This proxy will be voted as
specified by the stockholder. If no specification is made, all shares will be voted “FOR” the nominee for Class 1 director
named in Proposal 1 and “FOR” Proposals 2, 3, 4, 5 and 6.
The stockholder(s) represented herein appoint William
Kerby and Frank Orzechowski, and each of them, proxies with the power of substitution to vote all shares of common stock entitled to be
voted by said stockholder(s) at the Annual Meeting of the stockholders of NextTrip, Inc. (the “Company,” or “our”),
to be held virtually at on February 27, 2024, at (Mountain Time), and in any adjournment or postponement thereof as specified in this
proxy. To access the virtual meeting, you must have your control number and other information that is printed on the reverse side of this
form.
| Proposal
1 |
|
FOR |
AGAINST |
ABSTAIN |
| |
Election
of Class I directors: |
|
|
|
| |
Donald
P. Monaco |
☐ |
☐ |
☐ |
| |
|
|
|
|
| Proposal
2 |
|
FOR |
AGAINST |
ABSTAIN |
| |
To
ratify the appointment of Haynie & Company as our independent registered public accounting firm for our fiscal year ending February
28, 2025. |
☐ |
☐ |
☐ |
| |
|
|
|
|
| Proposal
3 |
|
FOR |
AGAINST |
ABSTAIN |
| |
To
approve, in accordance with Nasdaq Listing Rule 5635(d), the issuance of more than an aggregate of 19.99% of the outstanding shares
of our common stock upon conversion of outstanding shares of our Series J Nonvoting Convertible Preferred Stock, Series K Nonvoting
Convertible Preferred Stock, Series L Nonvoting Convertible Preferred Stock and Series M Nonvoting Convertible Preferred Stock and
exercise of certain warrants, all of which shares and warrants were issued to various investors pursuant to securities purchase agreements
entered into on December 31, 2024. |
☐ |
☐ |
☐ |
| |
|
|
|
|
| Proposal
4 |
|
FOR |
AGAINST |
ABSTAIN |
| |
To
approve, in accordance with Nasdaq Listing Rule 5635(c), the issuance of shares of our common stock upon conversion of outstanding
shares of our Series L Nonvoting Convertible Preferred Stock issued to certain insiders pursuant to debt conversion agreements entered
into with such insiders on December 31, 2024. |
☐ |
☐ |
☐ |
| |
|
|
|
|
| Proposal
5 |
|
FOR |
AGAINST |
ABSTAIN |
| |
To
approve, in accordance with Nasdaq Listing Rule 5635(d), the issuance of more than an aggregate of 19.99% of the outstanding
shares of our common stock pursuant to that certain Securities Purchase Agreement, dated September 19, 2024, entered into in connection
with an equity line of credit with Alumni Capital LP. |
☐ |
☐ |
☐ |
| |
|
|
|
|
| Proposal
6 |
|
FOR |
AGAINST |
ABSTAIN |
| |
To
approve the adjournment of the Annual Meeting to another place, or a later date or dates, if necessary or appropriate, to solicit
additional proxies in the event we have not received sufficient votes in favor of any of the foregoing proposals. |
☐ |
☐ |
☐ |
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