UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2022

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______________to _______________.

Commission File Number 001-40447

NEXTPLAT CORP

(Exact name of registrant as specified in its charter)

Nevada		65-0783722
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3250 Mary St., Suite 410, Coconut Grove, FL		33133
(Address of principal executive offices		(Zip Code)

(305)-560-5355

Registrant’s telephone number, including area code

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001	NXPL	The Nasdaq Stock Market Inc.
Warrants	NXPLW	The Nasdaq Stock Market Inc.

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

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

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

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

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

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.

Class		Outstanding at August 15, 2022
Common Stock, $0.0001 par value		9,508,096

FORM 10-Q

INDEX

	Page

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)	2

CONDENSED CONSOLIDATED BALANCE SHEETS	2

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	45

ITEM 4. CONTROLS AND PROCEDURES	45

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS	46

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	41

ITEM 3 DEFAULTS UPON SENIOR SECURITIES	49

ITEM 4. MINE SAFETY DISCLOSURES	49

ITEM 5. OTHER INFORMATION	49

ITEM 6. EXHIBITS	50

SIGNATURES	51

Part I Financial Information

Item 1. Financial Statements

The unaudited financial statements of NextPlat Corp, F/K/A/ Orbsat Corp, (“NextPlat,” the “Company,” “we,” or “our”), for the three and six months ended June 30, 2022 and for comparable periods in the prior year are included below. The financial statements should be read in conjunction with the notes to financial statements that follow.

NEXTPLAT CORP AND SUBSIDIARIES

FKA: ORBSAT CORP

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF

	June 30, 2022			December 31, 2021
		(unaudited)
ASSETS
Current assets:
Cash	$	20,467,722		$	17,267,978
Accounts receivable, net		344,915			349,836
Inventory		1,370,425			1,019,696
Unbilled revenue		120,816			100,422
VAT receivable		459,541			491,417
Prepaid expenses – current portion		64,523			97,068
Other current assets		2,873			48,539
Total current assets		22,830,815			19,374,956

Property and equipment, net		1,243,631			1,042,859
Right of use		909,908			22,643
Intangible assets, net		62,500			75,000
Prepaid expenses – long term portion		42,424			49,867

Total assets	$	25,089,278		$	20,565,325

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued liabilities	$	1,085,698		$	1,063,344
Contract liabilities		27,110			36,765
Note payable Coronavirus loans– current portion		60,825			56,391
Due to related party		-			35,308
Lease liabilities - current		203,561			19,763
Provision for income taxes		16,876			56,781
Stock subscription payable		-			1,400,000
Liabilities from discontinued operations		112,397			112,397
Total current liabilities		1,506,467			2,780,749

Long term liabilities:
Note payable Coronavirus loans– long term		187,544			253,757
Lease liabilities - long term		696,426			-

Total Liabilities		2,390,437			3,034,506

Stockholders’ Equity:
Preferred Stock, $0.0001 par value; 3,333,333 shares authorized		-			-
Common stock, ($0.0001 par value; 50,000,000 shares authorized, 9,293,096 shares issued and outstanding as of June 30, 2022 and 7,053,146 outstanding at December 31, 2021, respectively)		929			705
Additional paid-in capital		47,206,953			39,513,093
Accumulated (deficit)		(24,492,159	)		(21,986,215	)
Accumulated other comprehensive income (loss)		(16,882	)		3,236

Total stockholders’ equity		22,698,841			17,530,819

Total liabilities and stockholders’ equity	$	25,089,278		$	20,565,325

See the accompanying notes to the unaudited condensed consolidated financial statements.

NEXTPLAT CORP AND SUBSIDIARIES

FKA: ORBSAT CORP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHNSIVE LOSS

	Three Months Ended June 30, 2022			Three Months Ended June 30, 2021			Six Months Ended June 30, 2022			Six Months Ended June 30, 2021
	Three Months Ended June 30, 2022			Three Months Ended June 30, 2021			Six Months Ended June 30, 2022			Six Months Ended June 30, 2021
Net sales	$	2,871,479		$	1,956,260		$	6,449,257		$	3,417,688

Cost of sales		2,304,090			1,414,770			5,080,775			2,438,681

Gross profit		567,389			541,490			1,368,482			979,007

Operating expenses:
Selling, general and administrative		1,160,855			282,006			1,735,205			443,696
Salaries, wages and payroll taxes		670,797			479,538			1,306,373			687,712
Professional fees		156,990			256,034			483,203			548,916
Depreciation and amortization		111,996			73,248			211,565			146,948
Total operating expenses		2,100,638			1,090,826			3,736,346			1,827,272

Loss before other expenses and income taxes		(1,533,249	)		(549,336	)		(2,367,864	)		(848,265	)

Other (income) expense
Gain on debt extinguishment		-			(20,832	)		-			(20,832	)
Interest earned		(4,616	)		-			(9,572	)		-
Interest expense		3,681			940,907			6,924			1,461,601
Foreign currency exchange rate variance		123,547			(11,017	)		140,728			(27,498	)
Total other (income) expense		122,612			909,058			138,080			1,413,271

Net loss	$	(1,655,861	)	$	(1,458,394	)	$	(2,505,944	)	$	(2,261,536	)

Provision for income taxes		-			-			-			-

Net loss		(1,655,861	)		(1,458,394	)		(2,505,944	)		(2,261,536	)

Comprehensive Income:
Net loss		(1,655,861	)		(1,458,394	)		(2,505,944	)		(2,261,536	)
Foreign currency translation adjustments		(4,788	)		(14,345	)		(20,118	)		(12,734	)
Comprehensive loss	$	(1,660,649	)	$	(1,472,739	)	$	(2,526,062	)	$	(2,274,270	)

NET LOSS INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
Weighted number of common shares outstanding – basic & diluted		9,293,096			5,668,522			9,230,335			5,299,399
Basic and diluted net loss per share	$	(0.18	)	$	(0.26	)	$	(0.27	)	$	(0.43	)

See the accompanying notes to the unaudited condensed consolidated financial statements.

NEXTPLAT CORP AND SUBSIDIARIES

FKA: ORBSAT CORP

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the Six Months Ended June 30, 2022


	Common Stock				Additional
	$0.0001 Par Value				Paid in		Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity

Balance, December 31, 2021		7,053,146	$	705	$	39,513,093	$	(21,986,215	)	$	3,236		$	17,530,819

Issuance of common related to offering		2,229,950		223		7,004,815		-			-			7,005,038
Issuance of common related to restricted stock award		10,000		1		34,799		-			-			34,800
Stock based compensation in relation to restricted stock award		-		-		654,246		-			-			654,246
Comprehensive loss		-		-		-		-			(20,118	)		(20,118	)

Net loss		-		-		-		(2,505,944	)		-			(2,505,944	)

Balance, June 30, 2022		9,293,096	$	929	$	47,206,953	$	(24,492,159	)	$	(16,882	)	$	22,698,841

For the Six Months Ended June 30, 2021

	Common Stock				Additional
	$0.0001 Par Value				Paid in		Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity

Balance, December 31, 2020		817,450	$	82	$	14,486,492	$	(13,878,553	)	$	(42,832	)	$	565,189

Issuance common stock from convertible debt		1,345,468		135		1,644,132		-			-			1,644,267
Issuance of common related to offering		2,880,000		288		12,661,696		-			-			12,661,984
Issuance of common for over-allotment		432,000		43		1,983,226		-			-			1,983,269
Issuance of warrants for over-allotment		-		-		4,320		-			-			4,320
Issuance of common stock from exercise of warrant		1,000		-		5,000		-			-			5,000
Issuance of common for services		1,000		-		14,200		-			-			14,200
Beneficial conversion feature of convertible debt		-		-		340,420		-			-			340,420
Comprehensive loss		-		-		-		-			(12,734	)		(12,734	)

Net loss		-		-		-		(2,261,536	)		-			(2,261,536	)

Balance, June 30, 2021		5,476,918	$	548	$	31,139,486	$	(16,140,089	)	$	(55,566	)	$	14,944,379

For the Three Months Ended June 30, 2022

	Common Stock				Additional
	$0.0001 Par Value				Paid in		Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity

Balance, March 31, 2022		9,293,096	$	929	$	46,552,707	$	(22,836,298	)	$	(12,094	)	$	23,705,244

Stock based compensation in relation to restricted stock award		-		-		654,246		-			-			654,246
Comprehensive loss		-		-		-		-			(4,788	)		(4,788	)

Net loss		-		-		-		(1,655,861	)		-			(1,655,861	)

Balance, June 30, 2022		9,293,096	$	929	$	47,206,953	$	(24,492,159	)	$	(16,882	)	$	22,698,841

For the Three Months Ended June 30, 2021

	Common Stock				Additional
	$0.0001 Par Value				Paid in		Accumulated			Comprehensive			Stockholders’
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity

Balance, March 31, 2021		1,236,887	$	124	$	15,299,161	$	(14,681,695	)	$	(41,221	)	$	576,369

Issuance common stock from convertible debt		927,031		93		1,186,083		-			-			1,186,176
Issuance of common related to offering		2,880,000		288		12,661,696		-			-			12,661,984
Issuance of common for over-allotment		432,000		43		1,983,226		-			-			1,983,269
Issuance of warrants for over-allotment		-		-		4,320		-			-			4,320
Issuance of common stock from exercise warrant		1000		-		5,000		-			-			5,000
Comprehensive loss		-		-		-		-			(14,345	)		(14,345	)
Net loss		-		-		-		(1,458,394	)		-			(1,458,394	)

Balance, June 30, 2021		5,476,918	$	548	$	31,139,486	$	(16,140,089	)	$	(55,566	)	$	14,944,379

See accompanying notes to unaudited condensed consolidated financial statements.

NEXTPLAT CORP AND SUBSIDIARIES

FKA: ORBSAT CORP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED

	June 30, 2022			June 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,505,944	)	$	(2,261,536	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation expense		199,065			134,448
Amortization of intangible asset		12,500			12,500
Amortization of convertible debt, net		-			1,425,366
Amortization of right to use		-			15,476
Stock based compensation		689,046			14,200
Gain on debt extinguishment		-			(20,832	)
Change in operating assets and liabilities:
Accounts receivable		4,921			(158,079	)
Inventory		(350,729	)		(790,536	)
Unbilled revenue		(20,394	)		(10,171	)
VAT receivable		31,876			(279,215	)
Prepaid expense		39,988			-
Other current assets		45,666			(3,664	)
Accounts payable and accrued liabilities		22,354			662,022
Lease liabilities		(7,041	)		(15,512	)
Provision for income taxes		(39,905	)		227
Contract liabilities		(9,655	)		4,469
Net cash used in operating activities		(1,888,252	)		(1,270,837	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(395,245	)		(27,248	)
Net cash used in investing activities		(395,245	)		(27,248	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible note payable		-			350,000
Proceeds from (repayments) to note payable, related party, net		(35,308	)		114,981
Proceeds from common stock offering		5,605,038			12,661,984
Proceeds from warrant offering		-			1,987,589
Repayments to note payable Coronavirus loans		(30,413	)		-
Proceeds from exercise of warrant		-			5,000
Repayment of note payable		-			(121,848	)
Net cash provided by financing activities		5,539,317			14,997,706

Effect of exchange rate on cash		(56,076	)		(12,734	)

Net increase (decrease) in cash		3,199,744			13,686,887
Cash beginning of period		17,267,978			728,762
Cash end of period	$	20,467,722		$	14,415,649

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for
Interest	$	6,102		$	3,228
Income tax	$	38,555		$	-
Non-cash adjustments during the period for
Beneficial conversion feature on convertible debt	$	-		$	340,420
Recognition of operating lease liability	$	904,744		$	-
Conversion of convertible debt into common shares	$	-		$	1,644,268

See the accompanying notes to the unaudited condensed consolidated financial statements.

NEXTPLAT CORP AND SUBSIDIARIES

FKA: ORBSAT CORP

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The unaudited financial statements for the three and six months ending June 30, 2022, are not necessarily indicative of the results for the remainder of the fiscal year. The consolidated financial statements as of December 31, 2021, have been audited by an independent registered public accounting firm. The accounting policies and procedures employed in the preparation of these condensed consolidated financial statements have been derived from the audited financial statements of the “Company” for the year ended December 31, 2021, which are contained in the Company’s annual report on Form 10-K as filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2022. The consolidated balance sheet as of December 31, 2021 was derived from those financial statements.

Basis of Presentation and Principles of Consolidation

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The consolidated financial statements of the Company include the Company and its wholly-owned subsidiaries, Orbital Satcom Corp, Global Telesat Communications Ltd and NextPlat B.V. All material intercompany balances and transactions have been eliminated in consolidation.

Description of Business

Overview

Leveraging the e-commerce experience of the Company’s management team and the Company’s existing e-commerce platforms, the Company has embarked upon the rollout of a state-of-the-art e-commerce platform to collaborate with businesses to optimize their ability to sell their goods online, domestically, and internationally, and enabling customers and partners to optimize their e-commerce presence and revenue, which we expect will become the focus of the Company’s business in the future. Historically, the business of NextPlat has been, the provision of a comprehensive array of Satellite Industry communication services, and related equipment sales. As detailed in Online Storefronts and E-Commerce Platforms below, the Company operates two main e-commerce websites as well as 25 third-party e-commerce storefronts such as Alibaba, Amazon and Walmart. These e-commerce venues form an effective global network serving thousands of consumers, enterprises, and governments. NextPlat has announced its intention to broaden its e-commerce platform and is implementing comprehensive systems upgrade to support this initiative. The Company has also begun the design and development of a next generation platform for digital assets built for Web3 (an internet service built using decentralized blockchains). This new platform (“NextPlat Digital”) is currently in the design and development phase and will enable the use of a range of digital assets, such as non-fungible tokens (“NFTs”), in e-commerce and in community-building activities.

Online Storefronts and E-Commerce Platforms

We operate two e-commerce websites offering a range of MSS products and solutions through our subsidiaries, Orbital Satcom, which targets customers in North and South America, and GTC which targets customers in the UK, EU, Middle East, Asia and rest of the world. These websites produce sales and attract enquiries from customers and potential customers from all around the world. Over the long term, we plan to develop additional country-specific websites to target customers in South America, Asia and Europe where we anticipate there will be substantial further demand for our products.

In addition to our two main e-commerce websites, we make portable satellite voice, data and tracking solutions easier to find and buy online through our various third-party e-commerce storefronts such as Alibaba, Amazon and Walmart. We currently operate 25 storefronts across various countries in 5 continents. We have invested in personnel to translate our listings correctly in the different countries we are represented in and intend to regularly improve and increase our listings on all e-commerce sites. We currently have more than 9,000 product listings on all third-party sites and invest significantly in inventory to hold at Amazon’s various fulfillment centers around the world to ensure that orders are shipped to customers as quickly as possible. The products include handheld satellite phones, personal and asset tracking devices, portable high-speed broadband terminals, and satellite Wi-Fi hotspots. Our Amazon Marketplaces represented approximately 49.5% and 64.6% of the Company’s revenues during the six months ended June 30, 2022 and 2021, respectively. For the years ended December 31, 2021 and 2020, Amazon online marketplaces represented approximately 63.6% and 73.3% of total sales, respectively. We anticipate that these marketplaces will continue to represent a significant portion of our sales for the foreseeable future. Our e-commerce storefronts enable us to attract a significantly diversified level of sales from all over the world, ensuring we are not overly reliant on any single market or sector for our sales revenue. Furthermore, many products we sell require subscription-based services which allow us to increase our recurring revenue airtime sales.

With consumer behavior drastically changing because of COVID-19, e-commerce traffic witnessed double-digit gains in 2021 and 2020, respectively, as stores closed and shoppers used digital options. This significant change in consumer shopping habits resulted in a substantial increase of U.S., EU and U.K. consumers electing to shop online. During 2021, seni

SEC Form 10-Q filed by NextPlat Corp