v3.26.1
Acquisition of FSA Travel, LLC
 12 Months Ended
Feb. 28, 2026
FSA Travel, LLC [Member]  
Business Combination [Line Items]  
Acquisition of FSA Travel, LLC

NOTE 4 - Acquisition of FSA Travel, LLC

 

On February 6, 2025, the Company entered into a Membership Purchase Agreement (the “FSA Purchase Agreement”) with FSA Travel, LLC (“FSA”). Under the terms of the FSA Purchase Agreement, the Company acquired an initial 49% membership interest in FSA for a total of $1,000,000. The acquisition consideration consisted of $500,000 in cash and $500,000 of Series O Preferred shares (161,291 shares at $3.10 per share). The investment in FSA was initially accounted for using the equity method of accounting in accordance with ASC 323 because the Company had significant influence over the investee due to its 49% ownership interest.

 

Pursuant to the FSA Purchase Agreement, NextTrip was granted an option to acquire the remaining 51% membership interest in FSA for an additional $1,000,000. The option is exercisable within 60 days from the execution of the FSA Purchase Agreement, subject to the satisfaction of certain conditions outlined in the FSA Purchase Agreement. The consideration for the remaining interest would consist of $500,000 in cash and $500,000 of Series O Preferred shares (161,291 shares at $3.10 per share).

 

On April 9, 2025, the Company exercised its option to purchase the remaining 51% interest in FSA for additional consideration of $1.0 million comprised of $0.5 million in cash, and $0.5 million in shares of Series O Preferred (161,291 shares at $3.10 per share), pursuant to the FSA Purchase Agreement. In addition, on April 28, 2025, the Company paid an additional $0.8 million in contingent consideration (comprised of both cash and shares of Series O Preferred stock) to the former owners of FSA (the “FSA Unitholders”) pursuant to the FSA Purchase Agreement.

 

The contingent consideration issued as purchase consideration provides for additional distributions to the FSA Unitholders, the amount of which is dependent on the acquired business’ achievement of certain milestones. The Company determined the fair value of the contingent consideration as of the acquisition date (April 9, 2025) based on the probability and timing of achieving the respective milestones.

 

Upon completion of the acquisition of the remaining 51% of FSA membership units, the acquisition of the remaining 51% interest together with the initial 49% interest acquired on February 6, 2025 was accounted for as a step acquisition (business combination) under ASC 805, Business Combinations, with the Company identified as the acquirer. A step acquisition occurs when a shareholder obtains control over an entity (that is considered a business) by acquiring an additional interest in that entity. Under step acquisition accounting, the acquirer’s previously held equity interest is remeasured to its fair value as of the date in which control was obtained and included as part of the total consideration when determining goodwill. Given the short duration between the initial equity purchase of FSA (which was accounted for under the equity method of accounting) and the purchase of the remaining outstanding shares of FSA, it was determined that the book value of such equity method accounting equaled its fair value at the time control was obtained. In accordance with the acquisition method of accounting, the purchase price has been assigned to the assets acquired, and the liabilities assumed, based on their estimated fair value at the acquisition date. The Company did not incur any acquisition-related costs in connection with the acquisition.

 

 

The Company has completed the analysis to assign fair values to all assets acquired and liabilities assumed. The table below sets forth the consideration paid and the fair value of the assets acquired and liabilities assumed for the acquisition: 

 

Consideration paid     
Cash  $500,000 
Common stock   387,000 
Series O Preferred stock   500,000 
Earnout Payment   800,000 
Fair value of TA Milestone Payment   180,000 
Fair value of derivative liability   130,000 
Fair value of Initial Purchase   981,303 
Total consideration  $2,781,303 
      
Assets acquired and liabilities assumed     
Cash and cash equivalents  $471,660 
Accounts receivable   13,460 
Intangibles   960,000 
Goodwill   1,669,058 
Total assets  $3,114,178 
      
Accounts payable   12,474 
Due to FSA Unitholders   221,481 
SBA Loan   98,920 
Total liabilities  $332,875 
Total net assets  $2,781,303 

 

The fair value of the working capital items, including accounts receivable, other receivables, trade payables and deferred revenue, approximates their respective carrying values at the date in which control was obtained. Effective January 1, 2021, the Company has adopted ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which created an exception to the recognition and measurement principles of ASC 805, Business Combinations, for the Company’s contract assets and liabilities, including deferred revenue, essentially resulting in the carryover of the historical amounts determined in accordance with ASC 606, Revenue from Contracts with Customers, rather than fair value.

 

The fair value of the acquired tradename and acquired technology was determined using the relief from royalty method, which utilized projected financial information. The goodwill recognized in the acquisition primarily represents synergies with the existing operations of the Company, and the value of yet-to-be-acquired/developed customers, technology, assembled workforce, and any other assets.