News

NextPlay Technologies Reports Fiscal Q3 2022 Record Revenue of $4.2 Million, up 59% Sequentially; Gross Margin Increases to 53.5%

SmallCaps Daily January 14, 2022

176 9 minutes read

Sunrise, Florida – (NewMediaWire) – January 13, 2022 – NextPlay
Technologies, Inc. (NASDAQ: NXTP), a
digital business ecosystem for digital advertisers, consumers, video gamers and
travelers, reported results for the third quarter of fiscal 2022 ended November
30, 2021.

Fiscal Q3 Financial
Highlights

●
Achieved record quarterly revenue of $4.2 million, +59% from the previous
quarter. This compares very favorably to $0 revenue in the same period last
year.

●
Gross profit totaled $2.2 million, with consolidated gross margin improving to
53.5% from 51.9% in the previous quarter.

●
Assets totaled $121.0 million.

●
Cash, cash equivalents and restricted cash totaled $21.4 million, up from $8.9
million at the end of the previous quarter as the result of an equity offering
completed during the quarter.

Fiscal Q3 Operational
Highlights

●
Received conditional approvals for insurance and reinsurance licenses. The
licensing enables NextPlay’s NextShield LTD business unit to establish digital
primary insurance and reinsurance operations and to offer blockchain-delivered
products like parametric comprehensive travel insurance and bank deposit
insurance.

●
Launched NextPlay X Soma Labs, an innovation and design platform bringing
together non-fungible tokens (NFTs), social games, and Metaverse virtual
worlds for major brands, creators, and agencies.

●
Announced the MedTrek Fund, a blockchain securitized closed-end fund focused on
building medical facilities designed to lower the likelihood of infection for
four medical asset classes including primary care, tertiary care, long term
care and resort convalescent facilities.

● Appointed
Jorge E. Miro Hernandez as president and COO of NextBank International and
Carla P. Mendez as chief administrative officer.

Management Commentary

“The increase in our third
quarter revenues and significant gross margin expansion demonstrate that we’ve
arrived at a major inflection point in our growth and development strategy as
we gradually and successfully integrate several components of recent
synergistic acquisitions to transform our business,” commented NextPlay co-CEO,
Nithinan ‘Jessie’ Boonyawattanapisut. “This was the first full quarter that
showed 100% contribution from these acquisitions, and we believe that it
represents the foundation for further growth and expansion. We are now focused
on actualizing operational and sales efficiencies by deepening operations
integration, and by cross-selling new products across divisions.”

“During the quarter, our
digital interactive media division, NextMedia, delivered Blockbuster
2048, its first in-house casual game, out of the 16 games currently in the
pipeline that are scheduled to be released during fiscal Q4 2022 and Q1 2023,
to iOS and Android app stores. In conjunction, we have now released HotPlay
2.0, our next-generation in-game advertising platform to our internal teams. It
will deliver advertisements and real-world rewards into video games without
disrupting gameplay, offering new revenue streams to publishers and advertisers
alike. With the continued development of the HotPlay platform and integration
of the MakeItGames AI animation platform we anticipate the platform
will introduce disruptive and game-changing capabilities to game, virtual
reality, metaverse and other immersive experiences as we begin to release
HotPlay 2.0 to select partners during the first half of this calendar year and
beyond. We also worked on the deeper integration of HotPlay into other
parts of our ecosystem to enable digital advertisers and brands to use HotPlay
to reach a vast global consumer base.

“Our Fintech division comprises
our insurance, reinsurance, online banking and crypto portal operations.
Led by successful insurance and banking industry executives, the Fintech
division is bringing a diversified set of fintech solutions to market that will
offer asset banking, asset management, mobile payment, and a range of retail
banking services to customers around the world. NextBank welcomes blockchain
industry participants and is focused on providing enabling capabilities to
clients in the DeFi, NFT and exchange verticals. We expect NextBank to
provide significant contributions to earnings and to cash flow beginning in
fiscal Q1 2023. Our Longroot crypto portal is in active negotiations with
a number of prospective clients (issuers) who target issuances by fiscal Q2 and
Q3 2023. We also plan to issue our own digital insurance tokens, which allow
customers to purchase any of our insurance products, as well as a series of
stable coins to facilitate remittance services that NextBank will
provide. We see considerable synergies between NextBank’s services and
our Longroot crypto portal services to meet the financial and operational needs
of blockchain centric companies, providing a range of services to blockchain
industry participants.”

In fiscal Q3, our fintech
division received conditional approval of its general insurance and reinsurance
licenses application from the Labuan Financial Services Authority (Labuan FSA). The licensing advances our mission of
pushing the boundaries of insurance and reinsurance innovation with a product
portfolio that will be unique to the industry, and it keeps us on track to
launch our first two blockchained insurance products in fiscal Q2 and Q3 2023.”

“Our travel division is in the
process of integrating NextPlay’s NextTrip ConNextions booking
engine with a number of online travel agencies (OTAs). Several are already in
the certification process, which is the final step before OTAs gain access to
our travel inventory via their platforms. Our global inventory of vacation
rental properties provides many new lodging options to OTAs around the
world. We anticipate these integrations to help increase our booking
volumes as the resurgence in the travel and tourism sector continues following
the pandemic related lockdowns.”

“The major equity offering we
completed in the quarter fortified our balance sheet and supported our many
growth initiatives. We have launched an expense reduction program to eliminate
redundant systems and processes due to the acquisitions. Certain one-time
expenses related to post-merger activities incurred during this quarter are not
anticipated to recur in the future. For these reasons, we anticipate a
significant reduction in SG&A expenses and progression to positive cash
flow by the end of the second half of fiscal 2023.

“We have scheduled a special
shareholder meeting on January 28, 2022, and we encourage all shareholders to
submit their votes. We are seeking shareholder approval to complete our
previously announced acquisition of certain game-industry intellectual property
from Fighter Base Publishing Inc. and certain distributed ledger intellectual
property from Token IQ Inc. Both entities are majority-owned by
NextPlay’s Chief Technology Officer, Mark Vange, who is a visionary leader in
both industries.

“We expect the addition
of Token
IQ’s technology to become
the core to our products and services, from our Longroot asset-based
cryptocurrencies, our digital insurance tokens and HotPlay in-game tokens, to
future NextBank fintech services and NextTrip medical tourism offerings. Token
IQ also brings valuable technology and software development talent to support
the technology integration between our platforms and our partners, as well as
further our IP development. We believe Fighter Base Publishing’s AI driven
animation technology will bring unique capabilities to our HotPlay platform and
significant cost reduction to our game studio operations.

As we complete our final
quarter of fiscal 2022 ending in February, we expect to be exceptionally
well-positioned for growth across all three divisions: interactive digital
media, fintech and travel. We see near-term revenue growth and margin expansion
being further fueled by new HotPlay deployments and Longroot cryptocurrency
offerings, and we believe that these developments will steadily advance us
toward strong cash flow and profitability.”

Fiscal Q3 2022 Financial
Summary

Revenue for the third quarter
of fiscal 2022 totaled $4.2 million, an increase of 59% from $2.6 million in
the previous quarter and compares very favorably to no revenue in the same
year-ago quarter. The increase was primarily the result of the company’s
acquisition of Reinhart TV/Zappware completed on June 23, 2021, and NextBank
(formerly International Financial Enterprise Bank) completed on July 21, 2021.

NextMedia, the company’s
digital interactive media division, contributed revenue of $3.7 million driven
by organic growth of digital media globally. The company’s NextFinTech division
contributed revenue of $0.4 million, and the NextTrip travel division
contributed revenue of $0.1 million.

Consolidated gross profit
totaled $2.2 million or 53.5% of revenue, as compared to none in the same
period a year-ago. The margin improvement was due to high margin products in
digital media and financial services from recent acquisitions.

Operating expenses totaled
$11.1 million, compared to $0.46 million in the same year-ago period. The
increase was primarily due to the consolidation of expenses from business
combinations of HotPlay, Reinhart TV/Zappware, and NextBank, as well as
one-time post-merger related expenses.

Net loss attributable to the
Company was $9.06 million or $(0.1) per basic and diluted share, as compared to
a net loss of $0.5 million or $(5.09) per basic and diluted share in the same
year-ago period which only represented HotPlay’s financials per accounting
standard.

Cash and cash equivalents as of
November 30, 2021, totaled $20.5 million, compared to $8.9 million as of August
31, 2021. The increase was due to an equity offering completed during the
quarter.

The Company’s quarterly report
for the quarter ended November 30, 2021, and other reports the company files
with the SEC, including reports on Forms 10-Q, 10-K and 8-K, can be accessed
at sec.gov and on NextPlay’s website in the IR section.

About NextPlay Technologies

NextPlay Technologies, Inc.
(Nasdaq: NXTP) is a technology solutions company offering games, in-game
advertising, crypto-banking, connected TV and travel booking services to
consumers and corporations within a growing worldwide digital ecosystem.
NextPlay’s engaging products and services utilize innovative AdTech, Artificial
Intelligence and Fintech solutions to leverage the strengths and channels of
its existing and acquired technologies. For more information about NextPlay
Technologies, visit www.nextplaytechnologies.com and follow us on Twitter @NextPlayTech
and LinkedIn.

Forward-Looking Statements

This press release includes
“forward-looking statements” within the meaning of, and within the safe harbor
provided by the Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements give our current expectations, opinions, belief or forecasts of
future events and performance. A statement identified by the use of
forward-looking words including “will,” “may,” “expects,” “projects,”
“anticipates,” “plans,” “believes,” “estimate,” “should,” and certain of the
other foregoing statements may be deemed forward-looking statements. Although
the Company believes that the expectations reflected in such forward-looking
statements are reasonable, these statements involve risks and uncertainties
that may cause actual future activities and results to be materially different
from those suggested or described in this news release. Factors that may cause
such a difference include risks and uncertainties including, and not limited
to, our need for additional capital which may not be available on commercially
acceptable terms, if at all, which raises questions about our ability to
continue as a going concern; the fact that the COVID-19 pandemic has had, and
is expected to continue to have, a significant material adverse impact on the
travel industry and our business, operating results and liquidity; amounts owed
to us by third parties which may not be paid timely, if at all; certain amounts
we owe under outstanding indebtedness which are secured by substantially all of
our assets and penalties we may incur in connection therewith; the fact that we
have significant indebtedness, which could adversely affect our business and
financial condition; our revenues and results of operations being subject to the
ability of our distributors and partners to integrate our alternative lodging
rental (ALR) properties with their websites, and the timing of such
integrations; uncertainty and illiquidity in credit and capital markets which
may impair our ability to obtain credit and financing on acceptable terms and
may adversely affect the financial strength of our business partners; the
officers and directors of the Company have the ability to exercise significant
influence over the Company; stockholders may be diluted significantly through
our efforts to obtain financing, satisfy obligations and complete acquisitions
through the issuance of additional shares of our common or preferred stock; if
we are unable to adapt to changes in technology, our business could be harmed;
our travel business depends substantially on property owners and managers
renewing their listings; if we do not adequately protect our intellectual
property, our ability to compete could be impaired; our long-term success
depends, in part, on our ability to expand our property owner, manager and
traveler bases outside of the United States and, as a result, our business is
susceptible to risks associated with international operations; unfavorable
changes in, or interpretations of, government regulations or taxation of the
evolving ALR, Internet and e-commerce industries which could harm our operating
results; risks associated with the operations of, the business of, and the
regulation of, Longroot and NextBank International (formerly IFEB); the market
in which we participate being highly competitive, and because of that we may be
unable to compete successfully with our current or future competitors; our
potential inability to adapt to changes in technology, which could harm our
business; the volatility of our stock price; the fact that we may be subject to
liability for the activities of our property owners and managers, which could
harm our reputation and increase our operating costs; and that we have incurred
significant losses to date and require additional capital which may not be
available on commercially acceptable terms, if at all. More information about
the risks and uncertainties faced by NextPlay are detailed from time to time in
NextPlay’s periodic reports filed with the SEC, including its most recent
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, under the
headings “Risk Factors”. These reports are available at www.sec.gov. Other unknown or unpredictable factors also could have
material adverse effects on the Company’s future results and/or could cause our
actual results and financial condition to differ materially from those
indicated in the forward-looking statements. Investors are cautioned that any
forward-looking statements are not guarantees of future performance and actual
results or developments may differ materially from those projected. The
forward-looking statements in this press release are made only as of the date
hereof. The Company takes no obligation to update or correct its own
forward-looking statements, except as required by law, or those prepared by
third parties that are not paid for by the Company. If we update one or more
forward-looking statements, no inference should be drawn that we will make
additional updates with respect to those or other forward-looking statements.