NextPlay Technologies Inc. - Quarter Report: 2009 May (Form 10-Q)

Unassociated Document

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2009

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _________________

Commission File No. 000-52669

NEXT 1 INTERACTIVE, INC.

(Exact name of Registrant in its charter)

Nevada	26-3509845
(State or other jurisdiction of	(I.R.S. employer
incorporation or formation)	identification number)

2400 N Commerce Parkway, Suite 105

Weston, FL. 33326

(954) 888-9779

(Address of principal executive offices)

Registrant’s telephone number: (954) 888-9779

N/A

(Former name, former address and former

fiscal year, if changed since last report)

Copies to:

Joseph M. Lucosky, Esq.

Anslow & Jaclin, LLP

195 Route 9 South, Suite 204

Manalapan, New Jersey 07726

Tel.: (732) 409-1212

Fax.: (732) 577-1188

Indicate by check mark 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 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.

x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check one):

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes x No

As of July 20, 2009, there were 27,264,727 shares of common stock, par value $0.00001 per share, of the Registrant issued and outstanding.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14

Item 4.	Controls and Procedures	14

PART II - OTHER INFORMATION		16

Item 1.	Legal Proceedings	16

Item 1A.	Risk Factors	16

Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Submission of Matters to a Vote of Security Holders	18

Item 5.	Other Information	18

Item 6.	Exhibits	18

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Next 1 Interactive, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

	May 31, 2009			February 28, 2009

Assets
Current Assets
Cash	$	13,376		$	18,801
Accounts receivable, net of allowance for doubtful accounts		105,468			125,783
Prepaid expenses and other current assets		8,470			15,612
Security deposits		102,317			128,239
Total current assets		229,631			288,435

Property and equipment, net		172,128			190,765
Other assets		144,904			181,130
Develoment costs		514,998			514,998
Intellectual property		7,052,964			7,052,964
Total assets	$	8,114,625		$	8,228,292

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Bank overdrafts	$	56,391		$	-
Accounts payable and accrued expenses		1,018,176			968,452
Other current liabilities		630,649			550,291
Related party notes payable		191,107			221,513
Capital lease payable - current portion		43,163			43,163
Notes payable - current portion		130,000			87,966
Total current liabilities		2,069,486			1,871,385

Capital lease payable - long-term portion		61,424			71,470
Notes payable - long-term portion		616,773			628,807

Total liabilities		2,747,683			2,571,662

Stockholders' Equity (Deficit)
Series A Preferred stock, $.01 par value; 3,000,000 authorized; and 504,379 and 0 shares issued and outstanding at May 31, 2009 and February 28, 2009 respectively		5,048			5,048
Series B Preferred stock, $1 par value; 100,000,000 authorized; 0 shares issued and outstanding at May 31, 2009 and February 28, 2009 respectively		-			-
Series C Preferred stock, $.01 par value; 10,000,000 authorized; 0 shares issued and outstanding at May 31, 2009 and February 28, 2009 respectively		-			-
Common stock, $.00001 par value; 200,000,000 shares authorized; 25,502,167 and 24,611,500 shares issued and outstanding at May 31, 2009 and February 28, 2009 respectively		257			247
Additional paid-in-capital		12,427,883			11,732,549
Accumulated deficit		(7,066,246	)		(6,081,214	)
Total stockholders' equity (deficit)		5,366,942			5,656,630

Total liabilities and stockholders' equity (deficit)	$	8,114,625		$	8,228,292

The accompanying notes are an integral part of these consolidated financial statements.

Next 1 Interactive, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended
	May 31
	2009			2008

Revenues
Travel and commission revenues	$	165,104		$	780,442
Advertising revenues		26,311			-
Total revenues		191,415			780,442

Cost of revenues		112,388			576,574

Gross profit		79,027			203,868

Operating expenses
Salaries & benefits		366,870			400,662
Selling and promotions expense		24,025			24,025
General & administrative		600,310			325,847
Total operating expenses		991,205			750,534

Operating income (loss)		(912,178	)		(546,666	)

Other income/(expense)
Interest expense		(62,728	)		(22,989	)
Loss on forgiveness of debt		(10,213	)		-
Other expenses		88			(6,841	)
Total other income (expense)		(72,853	)		(29,830	)

Net loss	$	(985,031	)	$	(576,496	)

Weighted average number of shares outstanding		25,109,083			464,967,638

Basic and diluted net loss per share	$	(0.04	)	$	(0.00	)

The accompanying notes are an integral part of these consolidated financial statements.

Next 1 Interactive, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended
	May 31
	2009			2008
Cash flow from operating activities:
Net loss	$	(985,031	)	$	(576,496	)
Adjustments to reconcile net loss to net cash from
operating activities:
Loss on forgiveness of debt		10,213			-
Depreciation and amortization		18,636			-
Amortization of discount on notes payable		36,226			-
Stock based compensation and extinguishment of debt		281,195			-

Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		20,315			(143,062	)
(Increase) decrease in prepaid expenses and other current assets		7,142			(11,907	)
Increase (decrease) in accounts payable and accrued expenses		39,510			(119,970	)
Increase in other current liabilities		80,358			-
Net cash (used in) operating activities		(491,436	)		(851,435	)

Cash flows from investing activities:
Purchase of furniture, software and equipment		-			132,808
Technology development costs		-			(136,328	)
Increase in decurity seposits		25,922			(23,189	)
Proceeds received from note receivable		-			(20,000	)
Net cash provided by (used in) investing activities		25,922			(46,709	)

Cash flows from financing activities:
Bank overdraft		56,391			(22,360	)
Net payments of related party loans		(30,407	)		(9,760	)
Proceeds from note payable		30,000			-
Payments of capital lease payable		(10,046	)		(19,789	)
Proceeds from the sale of common stock and preferred stock		414,150			1,142,149
Net cash provided by financing activities		460,088			1,090,240

Net increase (decrease) in cash		(5,425	)		192,097

Cash at beginning of period		18,801			64,369

Cash at end of period	$	13,376		$	256,465

Supplemental disclosure:
Cash paid for interest	$	6,878		$	5,181

The accompanying notes are an integral part of these consolidated financial statements.

NEXT 1 INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2009

NOTE 1- BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions of Form 10-Q and Article 310 of Regulation S-K. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended February 28, 2009 included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange. The unaudited interim consolidated financial statements should be read in conjunction with those financial statements included in the Form 10-K. The preparation requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended May 31, 2009 are not necessarily indicative of the results that may be expected for the fiscal year ending February 28, 2010.

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material inter-company transactions and accounts have been eliminated in consolidation.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all interest-bearing deposits or investments with original maturities of three months or less.

ACCOUNTS RECEIVABLE

The Company extends credit to its customers in the normal course of business. Further, the Company regularly reviews outstanding receivables, and provides estimated losses through an allowance for doubtful accounts. In evaluating the level of established loss reserves, the Company makes judgments regarding its customers’ ability to make required payments, economic events and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. The Company also performs ongoing credit evaluations of customers’ financial condition. The Company maintains reserves for potential credit losses, and such losses traditionally have been within its expectations

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Machinery and equipment are depreciated over 3 to 10 years. Furniture and fixtures are depreciated over 7 years. Equipment leased under a capital lease is amortized over the term of that lease The Company performs ongoing evaluations of the estimated useful lives of the property and equipment for depreciation purposes. The estimated useful lives are determined and continually evaluated based on the period over which services are expected to be rendered by the asset. Maintenance and repairs are expensed as incurred.

IMPAIRMENT OF LONG LIVED ASSETS

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," The Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.

GOODWILL AND INTANGIBLE ASSETS

In June 2001, the Financial Accounting Standards Board approved the issuance of SFAS 142, “Goodwill and Other Intangible Assets”, which established accounting and reporting requirements for goodwill and other intangible assets. The standard requires that all intangible assets acquired that are obtained through contractual or legal right, or are capable of being separately sold, transferred, licensed, rented or exchanged must be recognized as an asset apart from goodwill. Intellectual properties obtained through acquisition, with indefinite lives, are not amortized, but are subject to an annual assessment for impairment by applying a fair value based test.

WEBSITE DEVELOPMENT COSTS

The Company accounts for website development costs in accordance with Emerging Issues Task Force (EITF) No. 00-2. Accordingly, all costs incurred in the planning stage are expensed as incurred, costs incurred in the website application and infrastructure development stage are accounted for in accordance with Statement of Position (SOP) 98-1 which requires the capitalization of certain costs that meet specific criteria, and costs incurred in the day to day operation of the website are expensed as incurred.

Management expects the website to be placed into service during the fiscal year ended February 28, 2010 at which time it will be subject to straight-line amortization over a five year period.

REVENUE RECOGNITION

We recognize revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, "Revenue Recognition." and related interpretations, revenue is recognized when the services have been rendered and collection is reasonably assured.

Travel: Gross travel tour revenues represent the total retail value of transactions booked for both agency and merchant transactions recorded at the time of booking, reflecting the total price due for travel by travelers, including taxes, fees and other charges, and are generally reduced for cancellations and refunds. We also generate revenue from paid cruise ship bookings in the form of commissions. Commission revenue is recognized at the date the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

The Travel Magazine: Subscription revenue is unearned revenue and is recognized on a net proportionate basis over the life of the subscription.

Advertising: We recognize advertising revenues in the period in which the advertisement is displayed, provided that evidence of an arrangement exists, the fees are fixed or determinable and collection of the resulting receivable is reasonably assured. If fixed-fee advertising is displayed over a term greater than one month, revenues are recognized ratably over the period as described below. The majority of insertion orders have terms that begin and end in a quarterly reporting period. In the cases where at the end of a quarterly reporting period the term of an insertion order is not complete, the Company recognizes revenue for the period by pro-rating the total arrangement fee to revenue and deferred revenue based on a measure of proportionate performance of its obligation under the insertion order. The Company measures proportionate performance by the number of placements delivered and undelivered as of the reporting date. The Company uses prices stated on its internal rate card for measuring the value of delivered and undelivered placements. Fees for variable-fee advertising arrangements are recognized based on the number of impressions displayed or clicks delivered during the period.

Under these policies, no revenue is recognized unless persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collection is deemed reasonably assured. The Company considers an insertion order signed by the client or its agency to be evidence of an arrangement.

INCOME TAXES

The Company accounts for income taxes under the liability method in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under this method, deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Had income taxes been determined based on an effective tax rate of 37.6% consistent with the method of SFAS 109, the Company's net losses for all periods presented would not materially change.

EARNINGS (LOSS) PER SHARE

The Company computes earnings per share in accordance with the provisions of SFAS No. 128, Earnings per share, which establishes standards for computing and presenting basic and diluted earnings per share. Basic earnings per share is computed by dividing net earnings available to common shareholders by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed assuming the exercise of stock options under the treasury stock method and the related income taxes effects, if not anti-dilutive. For loss periods common share equivalents are excluded from the calculation, as their effect would be anti-dilutive.

ACCOUNTING FOR STOCK-BASED COMPENSATION

Effective October 1, 2006, we adopted the provisions of SFAS No. 123(R) (as amended), “Share Based Payment,” using the modified prospective method, which results in the provisions of SFAS No. 123(R) being applied to the consolidated financial statements on a going forward basis. SFAS No. 123(R) revises SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes Accounting Principles Board (“APB”) Opinion 25, “Accounting for Stock Issued to Employees.” SFAS No. 123(R) establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services at fair value, focusing primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. It also addresses transactions in which an entity incurs liabilities in exchange for goods and services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

Stock-based compensation awarded to non-employees is accounted for under the provisions of EITF 96-18, “Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods and Services” and Staff Accounting Bulletin No. 107.

RECLASSIFICATION

Certain reclassifications have been made to the prior year financial statements in order for them to be in conformity with the current year presentation.

RECENT ACCOUNTING PRONOUNCEMENT

The FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, on June 29, 2009 and, in doing so, authorized the Codification as the sole source for authoritative U.S. GAAP. SFAS No. 168 will be effective for financial statements issued for reporting periods that end after September 15, 2009. Once it's effective, it will supersede all accounting standards in U.S. GAAP, aside from those issued by the SEC. SFAS No. 168 replaces SFAS No. 162 to establish a new hierarchy of GAAP sources for non-governmental entities under the FASB Accounting Standards Codification.

NOTE 3 – GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $7,066,246 and $6,081,214 and a working capital deficit of $1,839,855 and $1,582,950 at May 31, 2009 and February 28, 2009, respectively, net losses for the quarters ended May 31, 2009 and May 31, 2008 of $985,031 and $576,496, respectively and cash used in operations during the three months ended May 31, 2009 and May 31, 2008 of $491,436 and $851,435, respectively. While the Company is attempting to increase sales, the growth has not been significant enough to support the Company’s daily operations. The Company has continued to raise funds through private placements with third party. Management may attempt to raise additional funds by way of a public or private offering. While the Company believes in the viability of its strategy to improve sales volume and in its ability to raise additional funds, there can be no assurances to that effect. The Company's limited financial resources have prevented the Company from aggressively advertising its products and services to achieve consumer recognition.

The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan and generate increased revenues. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further implement its business plan and generate additional revenues provide the opportunity for the Company.

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at May 31, 2009:

Leased equipment	$	177,754
Furniture and equipment		21,069
Software		92,557
		291,380
Less: Accumulated depreciation		( 119,252	)
Net property and equipment	$	172,128

Depreciation expense for the quarters ended May 31, 2009 and 2008 was $18,636 and 0, respectively

NOTE 5 – NOTES PAYABLE

The Company has a note payable with an unrelated third party for $500,000. The note bears interest at 7% per year and matures in March 2011 payable in quarterly installments of $25,000. The balance of the note was approximately $309,000 of which approximately $100,000 was current at May 31, 2009.

In February 2009, the Company restructured note agreements with three existing note-holders. The collective balance at the time of the restructuring was $250,000 plus accrued interest payable of $158,000 which was consolidated into three new notes payable totaling $408,000. The notes bear interest at 10% per year and mature on May 31, 2010 at which time the total amount of principle and accrued interest is due. In connection with the restructure of these notes the Company issued 150,000 detachable warrants to purchase common stock at an exercise price of $3.00 per share. The warrant issuance is considered a discount and is included in other assets at May 31, 2009 and is amortized monthly over the term of the note. Approximately $36,000 was amortized as interest expense for the quarter ended May 31, 2009.

The Company executed a non-interest bearing promissory note with one of its landlords dated April 28, 2009 in the amount of $30,000. The note was originated in exchange for early termination of a lease agreement for office space located in West Chester, Pennsylvania. The terms of the note call for a $2,500 payment upon execution of the note and 11 monthly $2,500 payments beginning June 1, 2009. The Company recognized a loss of approximately $10,000 on the forgiveness of the lease commitment.

Interest expense on the notes payable was $20,345 and $22,989 for the quarters ended May 31, 2009 and 2008 respectively.

NOTE 6 – CAPITAL LEASE PAYABLE

The Company leases certain telephone and communications equipment through a lease agreement with a related party. The lease requires monthly payments of $5,078 including interest at approximately 18% per year. The lease expires on June 30, 2011.

Interest expense on the lease was $6,878 and $5,181 for the quarters ended May 31, 2009 and 2008, respectively.

NOTE 7 – RELATED PARTY TRANSACTIONS

The Company has two note payable with directors and officers for approximately $144,600. The notes bear interest at 18 % and 4% per year and have no stated maturity date. Interest expense on the loan was approximately $7,150 for each of the quarters ended May 31, 2009 and 2008.

The Company also has a loan payable to an existing shareholder for approximately $30,000. The loan has no stated interest rate and no stated maturity date.

As discussed further in Note 5, the Company leases equipment under a capital lease from an existing shareholder.

NOTE 8 – EQUITY

During the quarter ended May 31, 2009, the Company issued 908,000 shares of common stock for cash proceeds of $434,950

The Company also issued 133,450 shares of common stock for services valued at approximately $281,000 during the quarter.

In May 2009, the Company cancelled approximately 207,085 shares of common stock that had been previously issued to a former employee of the Company.

NOTE 9 – SEGMENT REPORTING

SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”, established standards for reporting information about operating segments in annual financial statements and required selected information about operating segments in interim financial reports issued to stockholders. It also established standards for related disclosures about products, services, and geographic areas. Operating segments are defined as components of the enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance.

The Company has two reportable operating segments: Media and Travel. The accounting policies of each segment are the same as those described in the summary of significant accounting policies. Each segment has its own product manager but the overall operations are managed and evaluated by the Company’s chief operating decision makers for the purpose of allocating the Company’s resources. The Company also has a corporate headquarters function which does not meet the criteria of a reportable operating segment. Interest expense and corporate expenses are not allocated to the operating segments.

The table below presents information about reportable segments for the three month period ended May 31, 2009 and May 31, 2008:

	5/31/2009		5/31/2008

Revenues
Media	$	26,311	$	-
Travel		165,104		780,442
Consolidated revenues	$	191,415	$	780,442

The table below reconciles the measurement of segment expenses shown in the previous table to the Company’s consolidated loss before taxes:

	5/31/2009		5/31/2008

Operating Expense
Media	$	412,322	$	-
Travel		217,020		951,841
Segment Expense		629,342		951,841
Corporate		361,863		375,267
Consolidated operating expense	$	991,205	$	1,327,108

Depreciation and Amortization
Media	$	8,766	$	-
Travel		9,870		-
Segment Total		18,636		-
Corporate		-
Consolidated depreciation and amortization	$	18,636	$	-

The Company did not generate any revenues outside the United States for quarters ended May 31, 2009 and 2008, and the Company did not have any assets located outside the United States.

NOTE 10 – SUBSEQUENT EVENTS

In June 2009, the Company completed the acquisition of certain rights, trademarks and other intangible property of Resort and Residence TV from its parent company, Televisual Media Works LLC (“Seller”). In exchange for these assets the Company paid $175,000. In addition, the Company is required to pay the Seller $500,000 on the first anniversary of the closing and $750,000 plus interest accrued at 8% annually on the second anniversary of the closing. The Company also issued a $3,000,000 zero coupon debenture to the Seller payable on June 9th 2012. The debenture bears interest at 5% annually payable in full upon maturity. The debenture also entitles the holder to receive 20% of all profits earned from the specified purchased assets through maturity, with such proceeds going towards the retirement of the debt. In connection with the agreement, the seller also receives $3,500,000 of Series B Preferred Stock of the Company. The Preferred Series B shares mature June 9, 2019. The seller has the right to convert the Preferred Series B shares into 3.5 million common shares should the network reach a minimum of 17 million households during the term of the Preferred Series B. The Company has the right to redeem or force conversion of the shares after the first year of operation of the network.

In June 2009, the Company received notice from a vendor that it would accept certain payment terms to settle a past balance due. In response to the settlement the Company paid the vendor $185,000 and will pay 10 monthly installments of $18,500.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

This Report contains statements that we believe are, or may be considered to be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Report regarding the prospects of our industry or our prospects, plans, financial position or business strategy, may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “intend,” “estimate,” “foresee,” “project,” “anticipate,” “believe,” “plans,” “forecasts,” “continue” or “could” or the negatives of these terms or variations of them or similar terms. Furthermore, such forward-looking statements may be included in various filings that we make with the SEC or press releases or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements contained herein, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our reports to the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this Report.

Next 1 plans to launch a TV Network known as Resort & Residence (R&R) during the second half of this year. The R&R Network will deploy both Interactive and Video on Demand capabilities and will allow Next 1 access to roughly 25 million households in the United States. The R&R TV Network will be supported by Next Ones digital media assets and expertise in the Travel and Real Estate arenas. During the first quarter of the year management has focused its efforts on the realignment of the company’s existing assets in both the travel and real estate arenas so they might compliment the planned introduction of the R&R National television network.

In order to accomplish this goal the company has and will continue to incur a number of expenditures throughout the balance of the year. New expenditures have included the purchase of the Resort and Residence Network, upgrades to existing technology solutions, outsourcing of interactive technology solutions, elimination of certain staff and the hiring of key consultants and/or full time management with significant expertise in the set up and operations of an Interactive Network such as Resort and Residence. Additionally management has looked to use its limited financial resources to either reconfigure existing operations so they will integrate with R&R or alternatively discontinue operations of certain non performing assets. Key examples of this include the closure of the Brands on Demand offices in Philadelphia with all web sales and travel solutions being realigned to be integrated into the R&R interactive sales programs. Additionally the company ceased real estate listings operations of the Home Preview Channel in Houston and Detroit pending the launch of the R&R Network and its new format.

In managements view these expenditures are a key investment to allow the company to secure a foothold in the new interactive platforms for TV. The acquisition of the R&R Network as well as the elimination or realignment of non conforming operations has resulted in both a significant drop in revenue from traditional operations while at the same time showing a marked increase in operational costs. These steps are deemed to be essential by management as they should reposition the company’s travel and real estate programs to capture potentially very significant new revenue once the R&R Network is launched.

The Company’s targeted focus of its TV Network in the Travel and Real Estate industries combined with its On-Demand and Interactive services for both television and the Internet puts the Company in position to address advertisers’ evolving need to focus on exploiting video opportunities on multiple platforms with the convergence of internet, television and mobile. The Company has developed and assembled key assets that allow it to provide media and technology solutions for consumers in the Home and Travel arenas across multiple media platforms. These two verticals (Home and Travel) hold significant appeal to advertisers as they continuously remain in the top five advertising spend categories in the North American market. Management believes the steps it is taking now will create a ‘clear differentiation’ in the cable TV space and provides the company’s shareholders and its clients with a unique and cutting edge solution to both traditional and non linear platforms to advertise their products.

Results of Operations

At May 31, 2009, our cash on hand was $13,376, compared to $18,801 at February 28, 2009. This decrease was primarily attributable to revenue reductions and cash requirements to fund on-going operations.

At May 31, 2009, our accounts receivable were $105,469, compared to $125,783 at February 28, 2009. This decrease was due to timing of interactive media sales to travel suppliers.

At May 31, 2009, our total assets were $8,114,625, compared to $8,228,292 at February 28, 2009. This decrease was due to small reductions in all asset classes.

At May 31, 2009, our total current liabilities were $2,069,486, compared to $1,871,385 at February 28, 2009. This increase was due primarily to an increase in the current portion of notes payable.

Three Months Ended May 31, 2009 Compared to Three Months Ended May 31, 2008

Revenues. Our total revenues were $191,415 for the three months ended May 31, 2009, compared to $780,442 for the three months ended May 31, 2008. The decrease from 2008 to 2009 was primarily due to the declining economy, resulting in a general decline in the travel and leisure industry.

Net Loss. We had a net loss of $985,031 for the three months ended May 31, 2009 compared to a net loss of $576,496 for the three months ended May 31, 2008. The loss increase from 2008 to 2009 was primarily due to the reduction in revenues while positioning the Company for a change in its business model from that of providing recreational travel services to that of a media business with a focus on travel and residential real estate utilizing the internet, internet radio and cable television.

Operating expenses. Our operating expenses include website maintenance fees, general and administrative expenses, salaries and benefits, advertising and promotion, legal and professional fees. Our total operating expenses increased from $750,534 for the three months ended May 31, 2008 to $991,205 for the three months ended May 31, 2009. The increase from 2008 to 2009 was primarily due to the cost required to position the Company for a change in its business model from that of providing recreational travel services to that of a media business with a focus on travel and residential real estate utilizing the internet, internet radio and cable television.

Liquidity and Capital Resources

At May 31, 2009, we had total current assets of $229,631, consisting primarily of accounts receivable and security deposits. Current liabilities of $2,069,486 consisting primarily of accounts payable and accrued expenses. The Company has accumulated a net loss from inception through May 31, 2009 of $7,066,246. Stockholders’ equity as of May 31, 2008 was $5,366,942. The Company has recorded gross revenues of $191,415 for the three months ended May 31, 2009.

While the Company is attempting to increase sales, the growth has not been significant enough to support the Company’s daily operations and the Company cannot currently fund its operations for the next 12 months. To date, we have funded our operations primarily from private equity financings. Until the Company becomes profitable, if ever, management will attempt to raise additional funds by way of one or more public or private equity or debt offerings. Several funding sources have been identified and discussions are underway. While we believe in the viability of our strategy to improve sales volume and in our ability to raise additional funds, there can be no assurances to that effect. The availability of funds depends in large measure on capital markets and over which we exert no control and liquidity factors. We can provide no assurance that sufficient financing will be available on desirable terms to fund investments, acquisitions, stock repurchases or extraordinary actions. General weakening in the credit markets could increase our cost of capital.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk generally represents the risk of loss that may result from the potential change in value of a financial instrument as a result of fluctuations in interest rates and market prices. We do not currently have any trading derivatives nor do we expect to have any in the future. We have established policies and internal processes related to the management of market risks, which we use in the normal course of our business operations.

Intangible Asset Risk. We have a substantial amount of intangible assets. We are required to perform goodwill impairment tests whenever events or circumstances indicate that the carrying value may not be recoverable from estimated future cash flows. As a result of our periodic evaluations, we may determine that the intangible asset values need to be written down to their fair values, which could result in material changes that could be adverse to our operating results and financial position. Although at May 31, 2009, we believed our intangible assets were recoverable, changes in the economy, the business in which we operate and our own relative performance could change the assumptions used to evaluate intangible asset recoverability. We continue to monitor those assumptions and their effect on the estimated recoverability of our intangible assets.

Item 4. Controls and Procedures.

a) Evaluation of Disclosure Controls and Procedures

Our Principal Executive Officer and Principal Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Our Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of as of May 31, 2009. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to the Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure.

b) Changes in Internal Control over Financial Reporting.

During the Quarter ended May 31, 2009, there were no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors.

In addition to the risk factors enumerated in our Form 10-K filed on June 16, 2009, we are subject to various additional risks that could have a negative effect on the Company and its financial condition. You should understand that these risks could cause results to differ materially from those expressed in forward-looking statements contained in this report and in other Company communications. Because there is no way to determine in advance whether, or to what extent, any present uncertainty will ultimately impact our business, you should give equal weight to each of the following:

The current worldwide recession and declines or disruptions in the travel industry could adversely affect our business or financial performance.

Our business and financial performance is affected by the health of the worldwide travel industry. Travel expenditures are sensitive to business and personal discretionary spending levels and tend to decline or grow more slowly during economic downturns, including downturns in any of our major markets. Events or weaknesses specific to the air travel industry that could negatively affect our business include continued fare increases, travel-related strikes or labor unrest, consolidations, bankruptcies or liquidations and further fuel price escalation. Additionally, our business is sensitive to safety concerns, and thus our business has in the past and may in the future decline after incidents of actual or threatened terrorism, during periods of political instability or geopolitical conflict in which travelers become concerned about safety issues, as a result of natural disasters such as hurricanes or earthquakes or when travel might involve health-related risks, such as avian flu. Such concerns could result in a protracted decrease in demand for our travel services. This decrease in demand, depending on its scope and duration, together with any future issues affecting travel safety, could significantly and adversely affect our business and financial performance over the short and long-term. In addition, the disruption of the existing travel plans of a significant number of travelers upon the occurrence of certain events, such as actual or threatened terrorist activity or war, could result in the incurrence of significant additional costs and constrained liquidity if we provide relief to affected travelers by not charging cancellation fees and/or by refunding the price of airline tickets, hotel reservations and other travel products and services.

We operate in an increasingly competitive global environment which may affect our competitive advantage.

The market for the services we offer is increasingly and intensely competitive. We compete with both established and emerging online and traditional sellers of travel services with respect to each of the services we offer. Some of our competitors, particularly travel suppliers such as airlines and hotels, may offer products and services on more favorable terms, including lower prices, no fees or unique access to proprietary loyalty programs, such as points and miles. Many of these competitors, such as airlines, hotel and rental car companies, have been steadily focusing on increasing online demand on their own websites in lieu of third-party distributors such as our Company. For instance, some low cost airlines, which are having increasing success in the marketplace, distribute their online inventory exclusively through their own websites. Suppliers who sell on their own websites typically do not charge a processing fee, and, in some instances, offer advantages such as increased or exclusive product availability and their own bonus miles or loyalty points, which could make their offerings more attractive to consumers than offerings like ours. In addition, we face increasing competition from other travel agencies, which in some cases may have favorable offerings for both travelers and suppliers, including pricing, connectivity and supply breadth. We also compete with other travel agencies for both travelers and the acquisition and retention of supply. The introduction of new technologies and the expansion of existing technologies, such as Metasearch and other search engine technologies, may increase competitive pressures or lead to changes in our business model. Increased competition has resulted in and may continue to result in reduced margins, as well as loss of travelers, transactions and brand recognition. We cannot assure you that we will be able to compete successfully against current, emerging and future competitors or provide differentiated products and services to our traveler base.

Evolving industry standards and rapid technological changes may render our technology obsolete.

Our success will depend in part upon our continued ability to enhance our existing products and services, to introduce new products and services quickly and cost effectively, meet evolving customer needs, achieve market acceptance for new product and service offerings, and to respond to emerging industry standards and other technological changes. There can be no assurance that we will be able to respond effectively to technological changes or new industry standards. Moreover, there can be no assurance that our competitors will not develop competitive products, or that any such competitive products will not have an adverse effect upon our operating results.

Moreover, we intend to continue to implement "best practices" and other established process improvements in its operations going forward. There can be no assurance that we will be successful in refining, enhancing and developing our operating strategies and systems going forward, that the costs associated with refining, enhancing and developing such strategies and systems will not increase significantly in future periods or that our existing software and technology will not become obsolete as a result of ongoing technological developments in the marketplace.

Integration of certain acquisitions could result in operating and financial difficulties.

We plan on entering into new web 2.0 business in the future. Our growth may depend, in part, on acquisitions. To the extent that we grow through acquisitions, we will face the operational and financial risks that commonly accompany that strategy. We would also face operational risks, such as failing to assimilate the operations and personnel of the acquired businesses, disrupting their ongoing businesses, increased complexity of our business, impairing management resources and their relationships with employees and travelers as a result of changes in their ownership and management. Further, the evaluation and negotiation of potential acquisitions, as well as the integration of an acquired business, may divert management time and other resources. Some acquisitions may not be successful and their performance may result in the impairment of their carrying value.

Certain financial and operational risks related to acquisitions that may have a material impact on our business are:

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Use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions;

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Amortization expenses related to acquired intangible assets and other adverse accounting consequences;

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Costs incurred in identifying and performing due diligence on potential acquisition targets that may or may not be successful;

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Difficulties and expenses in assimilating the operations, products, technology, information systems or personnel of the acquired company;

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Impairment of relationships with employees, suppliers and affiliates of our business and the acquired business;

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The assumption of known and unknown debt and liabilities of the acquired company;

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Failure to generate adequate returns on our acquisitions and investments;

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Entrance into markets in which we have no direct prior experience; and

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Impairment of goodwill or other intangible assets arising from our acquisitions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of Equity Securities and Use of Proceeds during the period ended May 31, 2009.

Item 3. Defaults upon Senior Securities.

There were no defaults upon senior securities during the period ended May 31, 2009.

Item 4. Submission of Matters to a Vote of Security Holders.

There were no matters submitted for a vote of our security holders during the period ended May 31, 2009.

Item 5. Other Information.

Subsequent Event:

Item 6. Exhibits.

Exhibit No.		Description

31.1		Certification by William Kerby, the Principal Executive Officer of Next 1 Interactive, Inc., pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2		Certification by Richard Sokolowski, the Principal Financial and Accounting Officer of Next 1 Interactive, Inc., pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1		Certification by William Kerby, the Principal Executive Officer of Next 1 Interactive, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification by Richard Sokolowski, the Principal Financial and Accounting Officer of Next 1 Interactive, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

Dated: July 20, 2009

	NEXT 1 INTERACTIVE, INC.

	/s/ William Kerby
	William Kerby
	Chief Executive Officer and Vice-Chairman
	(Principal Executive Officer)

	/s/ Richard Sokolowski
	Richard Sokolowski,
	Chief Financial Officer
	(Principal Financial and Accounting Officer)