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NextPlay Technologies, Inc. (NASDAQ: NXTP), a digital business ecosystem for consumers, digital advertisers, video gamers and travelers, reported results for the second quarter of fiscal 2022 ended August 31, 2021.
Financial Highlights
● Revenue totaled a record $2.6 million compared to none in the same year-ago quarter, which was attributed to acquisitions completed approximately mid-quarter only contributing about 60% of their revenue on aggregate. The contribution will rise to 100% in the current fiscal third quarter.
● Gross profit totaled $1.4 million, with consolidated gross margin at 51.9%.
● Assets totaled $103.8 million
● Cash and cash equivalents and restricted cash totaled $8.9 million.
Operational Highlights
● Completed merger with in-game advertising technology provider, HotPlay Enterprise, and changed the company name to NextPlay Technologies.
● Acquired majority interest in Zappware, an award-winning connected TV service provider that delivers a personalized entertainment experience across tens of millions of set-top boxes, connected TVs, smartphones, tablets and PCs.
● Acquired International Finance Enterprise Bank (IFEB). Under the new name of NextBank International, the bank will offer a full range of global fintech products and solutions, both direct to consumers and businesses as well as through other NextPlay divisions.
● Reorganized the company’s operations and technologies under three new divisions: Interactive Digital Media (NextMedia); Fintech (NextFin) products and solutions; and Travel (NextTravel) for travel technology and services.
● Partnered with Mediakeys, an international media and advertising agency, to accelerate the company’s global expansion of NextPlay’s in-game advertising platform.
● Strengthened NextPlay’s executive team with the appointments of in-game tech industry leader and former CEO of HotPlay, Nithinan (Jessie) Boonyawattanapisut, as co-CEO; award-winning digital media executive, Andrew Greaves, as chief operating officer; and industry leader in video game development, Mark Vange, as chief technology officer. Subsequent to the quarter, industry fintech leader, Jorge E. Miró Hernández, was appointed president and chief operating officer of NextBank International.
● Entered definitive agreement to acquire two complementary technology companies: Token IQ, a leading innovator in digital asset management that provides cryptocurrency owners a solution to replace lost or inaccessible assets; and Make It Games™, the AI-powered video game development platform of Fighter Base Publishing.
Management Commentary
“Our second quarter of fiscal 2022 was a major inflection point for NextPlay, as we transformed our business through several highly-synergistic acquisitions, and laid the foundation for future growth and expansion,” commented NextPlay co-CEO, Bill Kerby. “This resulted in record revenues of $2.6 million, which we expect to more than double in the current quarter as all of these acquisitions contribute fully. We also anticipate gross margin expansion above the record 51.9% in Q2 as we develop synergies between our divisions.
“This M&A activity included establishing a new Interactive Digital Media division with the acquisitions of the HotPlay in-game advertising platform at the beginning of the quarter and then Zappware’s Connected TV platform about mid-quarter.
“Zappware’s award-wining entertainment media platform reaches tens of millions of devices across Europe, with this expanding into Latin America, Asia and other parts of the world. HotPlay plugs directly into casual games on set-top boxes, connected TVs, smartphones, tablets and PCs. It seamlessly integrates digital ads into video games without disrupting gameplay, which empowers video game publishers to monetize their IP without compromising game integrity.
“We are working on the integration of Zappware with HotPlay, which would enable digital advertisers and brands using HotPlay to reach a vast global Pay TV consumer base like never before. We expect the addition of Make It Games to further enhance the HotPlay platform with AI-powered video game development technology and thereby provide a further competitive edge.
“We also acquired mid-quarter IFEB bank, which we now call NextBank International, that allows us to offer asset banking and management, mobile payments and insurance, as well as provide consumers and businesses with access to cryptocurrency exchanges and digital wallets. NextBank International will additionally support and enhance our other divisions with integrated fintech services and capabilities.”
NextPlay’s Fintech division is also working on several initial coin offerings through the Longroot ICO portal. This includes the previously announced Magnolia “Forestias” real estate coin offering and a tokenized fund for medical facility related investments, such as facilities serving medical tourism.
These ICOs are advancing towards IPO underwritings by Longroot, NextPlay’s majority owned Longroot Limited, which controls Thai SEC-authorized Initial Coin Offering portal Longroot (Thailand) Company Limited. Longroot is authorized and regulated under global-leading Thai Digital Asset Business Law and licensed by the Thai Securities & Exchange Commission.
Concurrently, NextPlay’s Fintech division is building relationships with Crypto Trading Exchanges and selling groups it believes are necessary for successful initial coin offerings. To that end, NextPlay’s Fintech team has been in advanced discussions with several well-established digital asset listing and trading exchanges in Asia and North America to be in step and in-place with the proposed ICOs.
“We see the addition of Token IQ technology becoming core to all our products and services, from our Longroot asset-based cryptocurrencies and HotPlay in-game tokens, to future NextBank fintech services and NextTrip medical tourism offerings,” continued Kerby. “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.
“Altogether, we believe the integration of these acquisitions will enable us to seamlessly engage consumers across the physical and digital worlds like no other company in the market today. They have been key to our vision of building a dynamic digital ecosystem that reaches consumers, gamers and travelers worldwide for the benefit of digital advertisers and brands.
“As we begin the second half of fiscal 2022, we are now exceptionally well positioned for growth across our three divisions of interactive digital media, fintech and travel. In addition to the planned Zappware/HotPlay integration, we see near-term revenue growth and margin expansion through anticipated HotPlay deployments and Longroot cryptocurrency offerings, and with this accelerating us toward strong cashflow and profitability.”
NextPlay’s co-CEO Nithinan ‘Jessie’ Boonyawattanapisut added, “Each of our new divisions are led by highly accomplished and capable management who are experts in their fields, and who have assembled equally capable teams. They are leading growth plans for each of these divisions, which includes many opportunities for cross-leveraging and cross-pollinating their respective technologies, customer bases, and market channels to generate robust returns and increasing shareholder value over the long term.”
Q2 Fiscal 2022 Financial Summary
Due to the reverse merger with HotPlay, the year-ago results for the second quarter of fiscal 2021 and at February 28, 2021 incorporate only HotPlay’s financials.
Revenue for the second quarter of fiscal 2022 totaled $2.6 million, as compared to no revenue in the same year-ago quarter. The improvement was primarily the result of the acquisitions of HotPlay, Zappware (via acquisition of Reinhart TV), and IFEB Bank (now NextBank International).
The Digital Interactive Media revenue was primarily due to the contribution of Zappware product deployments, services and service license agreements. The fintech revenue was attributed to interest income and loan fees, as generated by NextBank. The increase in travel revenue was due to travel reservations booked by the company’s NextTrip units.
Consolidated gross profit totaled $1.4 million or 51.9% of revenue, as compared to none in the year-ago period.
Total operating expenses totaled $6.2 million, compared to $422,000 in the same year-ago period. The majority increase was primarily due to one-time acquisition-related expenses, and the consolidation of expenses from business combinations of HotPlay, Reinhart/Zappware, and IFEB.
Net loss was $9.7 million or $(0.11) per basic and fully diluted share, as compared to a net loss of $411,000 or $(5.06) per basic and fully diluted share in same year-ago period.
Cash and cash equivalents at August 31, 2021 totaled $8.9 million, compared to $445,000 at February 28, 2021.
The Company’s Q2, 2022 Financial Report, 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. To learn more about NextPlay, visit NextPlayTechnologies.com, and follow us on Twitter @NextPlayTech and LinkedIn.
