NextTrip, Inc. (NASDAQ:NTRP), a transportation services company with a market capitalization of $5.94 million and concerning liquidity metrics according to InvestingPro data, has entered into a forbearance agreement with NextTrip Holdings, Inc. ("NTH") over the issuance of contingent shares, as disclosed in a Form 8-K filed with the SEC today. The agreement, dated December 9, 2024, relates to certain milestones connected to the acquisition of NTH by NextTrip.
The original share exchange agreement, set during the December 29, 2023 acquisition, entitled NTH shareholders to additional shares upon achieving specific business milestones. To date, three of the four milestones have been reportedly met, but formal notice has not been sent due to potential negative impacts on the company's NASDAQ listing, which is currently under review. The company's current ratio of 0.27 and negative return on assets of -164% highlight significant operational challenges.
The forbearance agreement stipulates that NTH will refrain from issuing a milestone payment determination date notice until January 31, 2025, or earlier in the event of a default. In return, NextTrip has committed to issuing the earned contingent shares and approving board appointments within five business days after the forbearance expiration date if NASDAQ's initial listing application is not approved by then.
This agreement aims to prevent any potential delisting or suspension of trading of NextTrip's common stock on NASDAQ due to regulatory delays. The full details of the forbearance agreement have been filed as Exhibit 10.1 with the SEC, which provides the basis for this report. Despite these challenges, the stock has shown remarkable strength with a 155% return over the past six months. InvestingPro subscribers have access to 17 additional key insights about NTRP's financial health and market position.
In other recent news, travel technology company NextTrip is set to acquire the online luxury travel agency, Five Star Alliance, with the transaction expected to close in Q4 2024. This move signals NextTrip's expansion into the luxury travel market, leveraging Five Star Alliance's proprietary search engine and established relationships. The acquisition will be financed with a combination of cash and shares, and is expected to be accretive to earnings.
NextTrip has also been actively pursuing growth strategies, including raising capital between $5.0M and $10.0M for marketing efforts and the creation of new travel products. Despite these strategic moves, H.C. Wainwright has maintained a Neutral rating on NextTrip due to uncertainty surrounding the success of the company's recapitalization and marketing efforts.
Furthermore, NextTrip raised $290,000 from the sale of additional unregistered equity securities, selling a total of 66,225 shares of Series I Convertible Preferred Stock. However, the company is facing potential delisting from the Nasdaq Stock Market LLC due to non-compliance with listing rules as its equity levels have fallen below the required minimum of $2.5 million. The company has until November 4, 2024, to submit a plan to restore compliance.
Despite these challenges, NextTrip has resolved a previous deficiency regarding periodic filing requirements by filing its Annual Report for the fiscal year ended February 29, 2024, and its Quarterly Report for the quarter ended May 31, 2024.
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