NextPlat Corp

Note1. Organization and Nature of Operations.

The term “Company” refers to NextPlat Corp and its wholly, majority owned and controlled subsidiaries, except where the context requires otherwise or where otherwise indicated.

NextPlat Corp:

NextPlat Corp, a Nevada corporation (the “Company”, “NextPlat”, “we”), formerly Orbsat Corp was incorporated in1997. The Company operatestwo main e-commerce websites as well as25 third-party e-commerce storefronts on platforms such as Alibaba, Amazon and Walmart. These e-commerce venues form an effective global network serving thousands of consumers, enterprises, and governments. NextPlat has announced its intention to broaden its e-commerce platform and is implementing a comprehensive system upgrade to support this initiative. We provide a comprehensive array of Satellite Industry communication services and related equipment sales.

Our wholly-owned subsidiary, Global Telesat Communications Limited (“GTC”), was formed under the laws of England and Wales in2008. On* February 19, 2015,*we entered into a share exchange agreement with GTC and all of the holders of the outstanding equity of GTC pursuant to which we acquired all of the outstanding equity in GTC.

Our wholly-owned subsidiary, Orbital Satcom Corp. (“Orbital Satcom”), a Nevada corporation, was formed on* November 14, 2014.*

On* June 22, 2022,NextPlat B.V. (“NXPLBV”) was formed in Amsterdam, Netherlands, as a wholly owned subsidiary of NextPlat Corp. Presently, NXPLBV doesnot* have any active operations

Progressive Care Inc.:

Progressive Care Inc. (“Progressive Care”) was incorporated under the laws of the state of Delaware on* October 31, 2006.*

Progressive, through its wholly-owned subsidiaries, Pharmco, LLC (“Pharmco901”), Touchpoint RX, LLC doing business as Pharmco Rx1002, LLC (“Pharmco1002”), Family Physicians RX, Inc. doing business as PharmcoRx1103 and PharmcoRx1204 (“FPRX” or “Pharmco1103” and “Pharmco1204”) (pharmacy subsidiaries collectively referred to as “Pharmco”), and ClearMetrX Inc. (“ClearMetrX”) is a personalized healthcare services and technology company that provides prescription pharmaceuticals and risk and data management services to healthcare organizations and providers.

Pharmco901 was formed on* November 29, 2005as a Florida Limited Liability Company and is a 100% owned subsidiary of Progressive Care. Pharmco901* was acquired by Progressive on* October 21, 2010.Progressive currently delivers prescriptions to Florida’s diverse population and ships medications to patients in states where they hold non-resident pharmacy licenses as well. Progressive currently holds Florida Community Pharmacy Permits at all Florida pharmacy locations and the Pharmco901* location is licensed as a non-resident pharmacy in the following states: Arizona, Colorado, Connecticut, Georgia, Illinois, Minnesota, Nevada, New Jersey, New York, Pennsylvania, Texas, and Utah. Progressive is able to dispense to patients in the state of Massachusetts without a non-resident pharmacy license because Massachusetts doesnot require such a license for these activities.

Pharmco1103 is a pharmacy with locations in North Miami Beach and Orlando, Florida that provides Pharmco’s pharmacy services to Miami-Dade County, Broward County, the Orlando/Tampa corridor, and the Treasure Coast of Florida. Progressive acquired all the ownership interests in Pharmco1103 in a purchase agreement entered into on* June 1, 2019.*

Pharmco1002 is a pharmacy located in Palm Springs, Florida that provides Pharmco’s pharmacy services to Palm Beach, St. Lucie and Martin Counties, Florida. Progressive acquired all the ownership interests in Pharmco1002 in a purchase agreement entered into on* July 1, 2018.*

ClearMetrX was formed on* June 10, 2020and providesthird*-party administration (“TPA”) services to340B covered entities. ClearMetrX also provides data analytics and reporting services to support and improve care management for health care organizations.

RXMD Therapeutics was formed on* October 1, 2019.RXMD Therapeutics has hadno* operating activity to date.

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Note2. Basis of Presentation and Principles of Consolidation

These consolidated financial statements have been prepared by management in accordance with general accepted accounting principles in the United States of America (“U.S. GAAP”) and this basis assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

Business acquisition of Progressive Care, Inc.

On* July 1, 2023,the Company, Charles M. Fernandez, Executive Chairman and Chief Executive Officer of the Company, and Rodney Barreto, Director of the Company, exercised common stock purchase warrants issued by Progressive Care (the “RXMD Warrants”) and were issued shares of Progressive Care common stock. After the exercise of the RXMD Warrants, the Company and Messrs. Fernandez and Barreto collectively owned 53% of Progressive Care’s voting common stock. At the time of exercise, all of the above RXMD Warrants were in-the-money. Also on July 1, 2023,*the Company entered into a voting agreement with Messrs. Fernandez and Barreto whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs. Fernandez and Barreto agreed to vote all of their shares of Progressive Care common stock (including any new shares of Progressive Care common stock acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Progressive Care common stock) that they own, directly or indirectly, in the same manner that NextPlat votes its Progressive Care common stock and equivalents. The voting agreement is irrevocable and perpetual in term.

The exercise of the stock options, along with the entry into the voting agreement, resulted in a change in control of Progressive Care under the voting interest model in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic805, Business Combination, and was accounted for as a business acquisition. Therefore, Progressive Care became a consolidated subsidiary of the Company on* July 1, 2023.*The Company previously accounted for its equity interest in Progressive Care as an equity method investment.

The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

In preparing the Consolidated Financial Statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition, and revenues and expenses for the years then ended. Actual results* maydiffer significantly from those estimates. Significant estimates made by management include, but arenot* limited to, assumptions used to calculate stock-based compensation, fair value of net assets acquired in the business combination with Progressive Care. common stock and options issued for services, net realizable value of accounts receivables the useful lives of property and equipment and intangible assets, the estimate of the fair value of the lease liability and related right of use assets, pharmacy benefit manager ("PBM") fee estimates, and the estimates of the valuation allowance on deferred tax assets and corporate income taxes.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications hadno effect on the reported results of operations.

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Note3. Summary of Significant Accounting Policies

The significant accounting policies of the Company are described below the fiscal year ended* December 31, 2023.Progressive Care became a consolidated subsidiary of the Company on July 1, 2023and as a result the Company has incorporated certain significant accounting policies of Progressive Care for the year ended December 31, 2023.*

Discontinued Operations

The Company’s former operations were developing and manufacturing products and services, which reduce fuel costs, save power and energy and protect the environment. The products and services were made available for sale into markets in the public and private sectors. In* December 2009,*the Company discontinued these operations and disposed of certain of its subsidiaries.

The remaining liabilities for discontinued operations are presented in the consolidated balance sheets under the caption “Liabilities from discontinued operation” and relates to the discontinued operations of developing and manufacturing of energy saving and fuel-efficient products and services. The carrying amounts of the major classes of these liabilities as of* December 31, 2023*, and2022 are summarized as follows (in thousands):

Liquidity

**** January 2022Private Placement of Common Stock**

On* December 31, 2021,after markets closed, a securities purchase agreement (the “Purchase Agreement”) was circulated to, and signatures were received from, certain institutional and accredited investors (the “DecemberInvestors”) in connection with the sale in a private placement by the Company of 2,229,950 shares of the Company’s common stock (the “DecemberOffering”). On January 2, 2022,the Company delivered to DecemberInvestors a fully executed Purchase Agreement, which was dated December 31, 2021.The purchase price for the common stock sold in the DecemberOffering was $3.24 per share, the closing transaction price reported by Nasdaq on December 31, 2021.*

The closing of the* DecemberOffering occurred on January 5, 2022.The Company received gross proceeds from the sale of the common stock in the December*Offering of approximately $7.2 million.

**** December 2022Private Placement of Common Stock**

On* December 9, 2022,*the Company entered into a securities purchase agreement with certain institutional and accredited investors for the sale by the Company in a private placement of 4,575,429 units, each unit comprising (i)one share of the Company’s common stock, and (ii)one warrant to purchaseone share of common stock. The offering price of the units was $1.75 per unit. The warrants included in the units are exercisable at a price of $1.75 per share and expire three years from the date of issuance.

On* December 9, 2022,the Company entered into placement agency agreement (the “Placement Agency Agreement”) with Dawson James Securities, Inc. (“Dawson James”). The Company has agreed to pay Dawson James a placement agent fee of 6% of the gross proceeds received in the private placement and 3% on all proceeds from officers and directors including any directed orders from the Company. As additional compensation under the Placement Agency Agreement, the Company will issue Dawson James warrants (the “Placement Agent Warrants”) to purchase up to 549,051 shares of Common Stock with an exercise price of $1.75 per share. The Placement Agent Warrants are exercisable at any time and from time to time during thethree-year period commencing on thesix*-month anniversary of the closing date. The Company reimbursed Dawson for up to $100,000 for its legal and due diligence expenses.

The offering closed on* December 14, 2022,*and the Company received gross proceeds of approximately $8.0 million for the units.

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**** April 2023Private Placement of Common Stock**

On* April 5, 2023,the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale by the Company in a private placement of 3,428,571 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”). The offering price of the Common Stock was $1.75 per share, the closing price of the Common Stock on April 4, 2023.On April 11, 2023,the Private Placement closed. Upon the closing of the Private Placement, the Company received gross proceeds of approximately $6.0 million. The Company sold the Common Stock to the Investor in reliance on the exemption from registration afforded by Section4*(a)(2) of the Securities Act and Rule506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws.

As of the date of this report, the Company’s existing cash resources and existing borrowing availability are sufficient to support planned operations for the next12 months. As a result, management believes that the Company’s existing financial resources are sufficient to continue operating activities for at leastone year past the issuance date of the financial statements.

Cash and Cash Equivalents

The Company places its cash with high credit quality financial institutions. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. All cash amounts in excess of $250,000, approximately $3.1 million, are unsecured. In* April 2023,the Company entered into a deposit placement agreement for Insured Cash Sweep Service (“ICS”). This service is a secure, and convenient way to access FDIC protection on large deposits, earn a return, and enjoy flexibility. The Company believes that the ICS agreement will mitigate its credit risk as it relates to uninsured FDIC amounts in excess of$250,000.*

Accounts Receivable and Allowance for Doubtful Accounts

The Company has a policy of reserving for questionable accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that* mayindicate that the realization of an account may*be in doubt. Account balances deemed to be uncollectible are offset against sales and relieved from accounts receivable, after all means of collection have been exhausted and the potential for recovery is considered remote.

Progressive Care trade accounts receivable are stated at the invoiced amount. Trade accounts receivable primarily include amounts fromthird-party pharmacy benefit managers (“PBMs”) and insurance providers and are based on contracted prices. Trade accounts receivable are unsecured and requireno collateral. Progressive Care records an allowance for doubtful accounts for estimated differences between the expected and actual payment of accounts receivable. These reductions were made based upon reasonable and reliable estimates that were determined by reference to historical experience, contractual terms, and current conditions. Each quarter, the Progressive Care reevaluates its estimates to assess the adequacy of its allowance and adjusts the amounts as necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventories

Inventories are valued at the lower of cost or net realizable value, using thefirst-infirst-out cost method. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analysis and assumptions including, butnot limited to, historical usage, expected future demand and market requirements. A change to the carrying value of inventories is recorded to cost of goods sold.

Prepaid Expenses

Prepaid expenses current and long term amounted to approximately $640,000 and $61,000 , respectively for the year ended* December 31, 2023*, as compared to $46,000 and $49,000 for the year ended* December 31, 2022*. Prepaid expenses include prepayments in cash for accounting fees, which are being amortized over the terms of their respective agreements, as well as cost associated with certain contract liabilities. The current portion consists of costs paid for future services which will occur within a year.

Investments

The Company applies the equity method of accounting to investments when it has significant influence, butnot controlling interest, in the investee. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. The carrying value of our equity method investment is reported as “equity method investment” on the consolidated balance sheets. The Company’s equity method investment is reported at cost and adjusted each period for the Company’s share of the investee’s income or loss and dividend paid, if any. The Company’s proportionate share of the net loss resulting from these investments is reported under the line item captioned “equity in net loss of affiliate” in the consolidated statements of operations and comprehensive loss. Note15 contains additional information on the equity method investment.

The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment* may**not* be recoverable. Management reviewed the underlying net assets of the investee as of* December 31, 2023* and determined that the Company’s proportionate economic interest in the investee indicate that the investments werenot impaired.

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Foreign Currency Translation

The Company’s reporting currency is U.S. Dollars. The accounts ofone of the Company’s subsidiaries, GTC, is maintained using the appropriate local currency, Great British Pound, as the functional currency. All assets and liabilities are translated into U.S. Dollars at balance sheet date, shareholders’ equity is translated at historical rates and revenue and expense accounts are translated at the average exchange rate for the year or the reporting period. The translation adjustments are reported as a separate component of stockholders’ equity, captioned as accumulated other comprehensive (loss) gain. Transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the statements of operations.

The relevant translation rates are as follows: for the year ended* December 31, 2023*, closing rate at $1.27 US$: GBP, yearly average rate at $1.24 US$: GBP, for the year ended* December 31, 2022* closing rate at $1.21 US$: GBP, yearly average rate at $1.24 US$: GBP.

Revenue Recognition and Unearned Revenue

In accordance with ASUNo. 2016-12, Revenue from Contracts with Customers (Topic606*): Narrow-Scope Improvements and Practical Expedient*, which is to (1) clarify the objective of the collectability criterion for applying paragraph606-10-25-7; (2) permit an entity to exclude amounts collected from customers for all sales (and other similar) taxes from the transaction price; (3) specify that the measurement date for noncash consideration is contract inception; (4) provide a practical expedient that permits an entity to reflect the aggregate effect of all modifications that occur before the beginning of the earliest period presented when identifying the satisfied and unsatisfied performance obligations, determining the transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations; (5) clarify that a completed contract for purposes of transition is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP before the date of initial application, and (6) clarify that an entity that retrospectively applies the guidance in Topic606 to each prior reporting period isnot required to disclose the effect of the accounting change for the period of adoption. The amendments of this ASU are effective for fiscal years beginning after* December 15, 2017,and interim periods within those fiscal years. There wasno* impact as a result of adopting this ASU on the financial statements and related disclosures. Based on the terms and conditions of the product arrangements, the Company believes that its products and services can be accounted for separately as its products and services have value to the Company’s customers on a stand-alone basis. When a transaction involves more thanone product or service, revenue is allocated to each deliverable based on its relative fair value; otherwise, revenue is recognized as products are delivered or as services are provided over the term of the customer contract.

e-Commerce Operations:

The Company recognizes revenue from satellite services when earned, as services are rendered or delivered to customers. Equipment sales revenue is recognized when the equipment is delivered to and accepted by the customer. Only equipment sales are subject to warranty. Historically, the Company hasnot incurred significant expenses for warranties. Equipment sales which have been prepaid, before the goods are shipped are recorded as contract liabilities and once shipped is recognized as revenue. The Company also records as contract liabilities, certain annual plans for airtime, which are paid in advance. Once airtime services are incurred, they are recognized as revenue. Unbilled revenue is recognized for airtime plans whereby the customer is invoiced for its data usage the following month after services are incurred.

The Company’s customers generally purchase a combination of our products and services as part of a multiple element arrangement. The Company’s assessment of which revenue recognition guidance is appropriate to account for each element in an arrangement can involve significant judgment. This assessment has a significant impact on the amount and timing of revenue recognition.

The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC606, we perform the followingfive steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. Thefive-step model is applied to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services transferred to the customer. At contract inception, once the contract is determined to be within the scope of ASC606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize revenue in the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Contract liabilities are shown separately in the consolidated balance sheets as current liabilities. At* December 31, 2023*, we had contract liabilities of approximately $42,000. At* December 31, 2022*, we had contract liabilities of approximately $36,000.

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Healthcare Operations:

The Company provides prescription pharmaceuticals, COVID-19 related diagnostics and vaccinations, TPA services, and contracted pharmacy services for340B covered entities under the340B Drug Discount Pricing Program. Under the terms of the contracted pharmacy services for340B covered entities, the Company acts as a pass-through for reimbursements on prescription claims adjudicated on behalf of the340B covered entities in exchange for a dispensing fee per prescription.

The Company recognizes product sales from prescriptions dispensed to patients (customers) at the time the drugs are physically delivered to a customer or when a customer picks up their prescription, which is the point in time when control transfers to the customer.340B dispensing fees are a component of340B contract revenue, which are recognized at the time the drugs are received by the patient, by either delivery or customer pick up. Each prescription claim is considered an arrangement with the customer and is a separate performance obligation. Payments are received directly from the customer at the point of sale, or the customers’ insurance provider is billed electronically. Forthird-party medical insurance and other claims, authorization is obtained to ensure payment from the customer’s insurance provider before the medication is dispensed to the customer. Authorization is obtained for these sales electronically and a corresponding authorization number is issued by the customer’s insurance provider. The Company is the agent in all of the340B pharmacy dispensing service agreements transactions with340B covered entities andnot the principal in the transactions. Thus, the Company only recognizes its net fee for the prescription dispensing transactions andnot the gross billing and cost of goods sold for the drugs dispensed.

The Company accrues an estimate of PBM fees, including direct and indirect remuneration (“DIR”) fees, which are assessed or expected to be assessed by payers at some point after adjudication of a claim, as a reduction of prescription revenue at the time revenue is recognized. Changes in the estimate of such fees are recorded as an adjustment to revenue when the change becomes known.

DIR fees are fees charged by PBMs to pharmacies for network participation as well as periodic reimbursement reconciliations. For some PBMs, DIR fees are charged at the time of the settlement of a pharmacy claim. Other PBMs donot determine DIR fees at the claim settlement date, and therefore DIR fees are collected from pharmacies after claim settlement, often as clawbacks of reimbursements based on factors that vary from plan to plan. For example,two PBMs calculate DIR fees on a trimester basis and charge the Company for these fees as reductions of reimbursements paid to the Companytwo tothree months after the end of the trimester (e.g., DIR fees for* January –** April 2023claims were clawback by these PBMs in July –** August 2023).For DIR fees that arenot* collected at the time of claim settlement, the Company records an accrued liability at each reporting date for estimated DIR fees that are expected to be collected by the PBMs in a future period. The estimated liability for these fees is highly subjective and the actual amount collected* may*differ from the accrued liability. The uncertainty of management’s estimates is due to inadequate disclosure to the Company by the PBMs as to exactly how these fees are calculated either at the time the DIR fees are actually assessed and reported to the Company. The detail level of the disclosure of assessed DIR fees varies based on the information provided by the PBM.

Billings for most prescription orders are withthird-party payers, including Medicare, Medicaid, and insurance carriers. Customer returns are nominal.

The Company recognizes revenue from TPA services as it satisfies the performance obligations under the TPA contract with a340B covered entity. TPA services provided to covered entities include consulting services, accounting and reconciliation of contract pharmacy billings, and various compliance services. The covered entity simultaneously receives and consumes benefits as the Company performs services under the TPA contract. These services are capable of being distinct fromone another, e.g., the covered entity* mayreceive benefit from each separate service, but in the context of a TPA contract, the services arenot* distinct with the context of the TPA contract. Instead, the Company provides a significant service of integrating the services into a combined output that benefits the covered entity. Therefore, the Company considers the combined services to be a single performance obligation in each TPA contract.

For each TPA contract, the Company recognizes revenue by measuring the progress toward complete satisfaction of each performance obligation. The Company uses various observable output methods in measuring progress toward satisfaction of each performance obligation, most notably gross billings under each contract.

ASC606 provides a practical expedient wherein an entity* may*recognize revenue in the amount to which it has a right to invoice a customer if the entity has a right to consideration from the customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. This expedient could be available, for example, for a service contract in which an entity bills a fixed amount for each hour of service provided. The Company believes that this practical expedient applies to its TPA contracts and we have elected this method in measuring revenue over the TPA contract term.

The Company recognizes COVID-19 testing revenue when the tests are performed and results are delivered to the customer. Each test is considered an arrangement with the customer and is a separate performance obligation. Payment is generally received in advance from the customer.

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Cost of Product Sales and Services

Cost of sales consists primarily of materials, airtime and overhead costs incurred internally and amounts incurred to contract manufacturers to produce our products, airtime and other implementation costs incurred to install our products and train customer personnel, and customer service andthird-party original equipment manufacturer costs to provide continuing support to our customers. There are certain costs which are deferred and recorded as prepaids, until such revenue is recognized. Refer to revenue recognition above as to what constitutes deferred revenue.

Shipping and handling costs are included as a component of costs of product sales in the Company’s consolidated statements of operations because the Company includes in revenue the related costs that the Company bills its customers.

Advertising

Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred. Advertising expense was approximately $188,000 and $93,000 for the years ended* December 31, 2023* and2022, respectively.

Intangible Assets

Acquired intangible assets with finite lives other than goodwill are amortized over their useful lives. For intangible assets acquired in a business combination, the estimated fair values of the assets received are used to establish their recorded values. Acquired intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite. Valuation techniques consistent with the market approach, income approach, and/or cost approach are used to measure fair value. Intangible assets subject to amortization represent the fair value of pharmacy records, tradenames and customer contracts acquired, and capitalized software development costs. In valuing these assets, the Company makes assumptions regarding useful lives and projected growth rates, and significant judgment is required. The Company periodically reviews its identifiable intangible assets for impairment as events or changes in circumstances indicate that the carrying amount of such assets* may**not* be recoverable. If the carrying amounts of those assets exceed their respective fair values, additional impairment tests are performed to measure the amount of the impairment losses, if any.

Pharmacy records and developed software are amortized over 5 years. Tradenames and customer contracts are amortized over 10 years. Useful lives of intangible assets are periodically evaluated for reasonableness and the assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount* may**no* longer be recoverable.

Business acquisitions

The Company records business acquisitions using the acquisition method of accounting. All of the assets acquired, liabilities assumed, and contractual contingencies are recognized at their fair value on the acquisition date. The application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets that are depreciated and amortized and goodwill. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Acquisition-related expenses and restructuring costs are recognized separately from the business combination and are expensed as incurred. The Company uses a measurement period following the acquisition date to gather information that existed as of the acquisition date that is needed to determine the fair value of the assets acquired, liabilities assumed and equity interests. The measurement period ends once all information is obtained, butno later thanone year from the acquisition date

Goodwill

Goodwill represents the excess of the purchase price over the value assigned to net tangible and identifiable intangible assets. Progressive Care, which is our Healthcare Operations, is considered to be the reporting unit for goodwill. Valuation techniques consistent with the market approach, income approach, and/or cost approach are used to measure fair value. Goodwill and other indefinite-lived intangible assets are assessed annually for impairment in thefourth fiscal quarter and in interim periods if events or changes in circumstances indicate that the assets* may*be impaired.

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Property and Equipment

Property and equipment are carried at historical cost less accumulated depreciation. Depreciation is based on the estimated service lives of the depreciable assets and is calculated using the straight-line method. Expenditures that increase the value or productive capacity of assets are capitalized. Fully depreciated assets are retained in the property and equipment, and accumulated depreciation accounts until they are removed from service. When property and equipment are retired, sold or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Repairs and maintenance are expensed as incurred.

The estimated useful lives of property and equipment are generally as follows:

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Depreciation expense for the years ended* December 31, 2023*, and2022 was approximately $758,000 and $465,000, respectively.

Impairment of Long-lived Assets

The Company reviews its long-lived assets, comprised of property and equipment, right-of-use assets, and intangible assets, whenever events or changes in circumstances indicate that the carrying amount of an asset* may**not* be recoverable and consider market participants in accordance with ASC360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company evaluates the long-lived assets of the reporting units for impairment at the lowest asset group level for which individual cash flows can be identified. When evaluating long-lived assets for potential impairment, the carrying amount of the asset group is compared to the estimated future undiscounted cash flows. The impairment loss calculation compares the carrying amount ofthe assets to the fair value based on estimated discounted future cash flows. If required, an impairment loss is recorded for that portion of the asset’s carrying value in excess of fair value. As of* December 31, 2023,there wereno* indications that the carrying amounts of our long-lived assets exceeded their respective fair values. The Company didnot consider it necessary to record any impairment charges during the years ended* December 31, 2023* and* December 31, 2022*, respectively.

Fair Value of Financial Instruments

Derivatives are required to be recorded on the balance sheet at fair value. These derivatives, including embedded derivatives in the Company’s structured borrowings, are separately valued and accounted for on the Company’s balance sheet. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices arenot readily available, fair values are determined using market-based pricing models incorporating readily observable market data and requiring judgment and estimates.

The Company didnot identify any other assets or liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with the accounting guidance. The carrying amounts reported in the balance sheet for cash, accounts payable, accrued expenses, and notes payable approximate their estimated fair market values based on the short-term maturity of the instruments.

Stock-based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

The Company estimated the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of the fair value using the option-pricing model is affected by the stock price as well as assumptions regarding the number of highly subjective variables.

In* June 2018,the FASB issued ASU2018*-07, Compensation – Stock Compensation. (Topic718). This update was intended to reduce cost and complexity and to improve financial reporting for share-based payments issues to non-employees (for example, service providers, external legal counsel, suppliers, etc.). The ASU expanded the scope of ASC718, Compensation - Stock Compensation, which previously only included share-based payments issued to employees, to include share-based payments issues to non-employees for goods and services. Consequently, the accounting for share-based payment to non-employees and employees will be substantially aligned. This standard became effective for the financial statements issues by public companies for the annual and interim periods beginning after* December 15, 2018.Management adopted this standard on January 1, 2019.*

Income Taxes

The Company accounts for income taxes pursuant to the provision of ASC740-10, “Accounting for Income Taxes” (“ASC740-10”) which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach require the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely thannot that the net deferred asset willnot be realized.

The Company follows the provision of ASC740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there* maybe uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC740*-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely thannot that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken arenot offset or aggregated with other positions.

Tax positions that meet the more likely thannot recognition threshold is measured at the largest amount of tax benefit that is more than50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

The Company believes its tax positions are all more likely thannot to be upheld upon examination. As such, the Company hasnot recorded a liability for uncertain tax benefits.

The Company has adopted ASC740-10-25, “Definition of Settlement,” which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position isnot considered more likely thannot to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally forthree years after they are filed.

F-17

Leases

Effective* January 1, 2019,the Company accounts for its leases under ASC842,* Leases. Under this guidance, we determine if an arrangement contains a lease at inception based on whether ornot the Company has the right to control the asset during the contract period and other facts and circumstances. Arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred.

In calculating the right of use asset and lease liability, the Company has elected to combine lease and non-lease components. The Company excludes short-term leases having initial terms of12 months or less from the new guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.

Research and Development

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic730-10, Research and Development (“ASC730-10”). Under ASC730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. For the years ended* December 31, 2023* and2022, there wereno expenditures on research and development.

Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) and all changes to the statements of stockholders’ equity. For the Company, comprehensive income (loss) for the years ended* December 31, 2023* and2022 included net income (loss) and unrealized income (losses) from foreign currency translation adjustments.

Earnings per Common Share

Net income (loss) per common share is calculated in accordance with ASC Topic260: Earnings per Share (“ASC260”). Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share doesnot include dilutive common stock equivalents in the weighted average shares outstanding as they would be anti-dilutive. In periods where the Company has a net loss, all dilutive securities are excluded.

F-18

Related Party Transactions

A party is considered to be related to the Company if the party directly or indirectly or throughone or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company* maydeal ifone* party controls or can significantly influence the management or operating policies of the other to an extent thatone of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest inone of the transacting parties and can significantly influence the other to an extent thatone or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party, (see Note25).

Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In* August 2023,the FASB issued Accounting Standards Update (“ASU”)2023-04, “Liabilities (Topic405*) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting BulletinNo. 121”, to amend and add various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff BulletinNo. 121.

In* July 2023,the FASB issued ASU2023*-03, “Presentation of Financial Statement (Topic205), Income Statement - Reporting Comprehensive Income (Topic220), Distinguishing Liabilities from Equity (Topic480), Equity (Topic505), and Compensation - Stock Compensation (Topic718)”, to amend various SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting BulletinNo. 120, among other things. The Company adopted this conforming guidance upon issuance and the adoption hadno material impact on our consolidated financial statements and related disclosures.

In* June 2016,the FASB issued ASU2016*-13, “Financial Instruments – Credit Losses (Topic326) Measurement of Credit Losses on Financial Instruments” (“ASU2016-13”), which introduces an impairment model based on expected, rather than incurred, losses. Additionally, it requires expanded disclosures regarding (a) credit risk inherent in a portfolio and how management monitors the portfolio’s credit quality; (b) management’s estimate of expected credit losses; and (c) changes in estimates of expected credit losses that have taken place during the period. In* November 2018,the FASB issued ASU2018*-19, “Codification Improvements to Topic326, Financial Instruments – Credit Losses.” This ASU clarifies receivables from operating leases are accounted for using the lease guidance andnot as financial instruments. In* April 2019,the FASB issued ASU2019*-04, “Codification Improvements to Topic326, Financial Instruments – Credit Losses, Topic815, Derivatives and Hedging, and Topic825, Financial Instruments.” This ASU clarifies various scoping and other issues arising from ASU2016-13. In* March 2020,the FASB issued ASU2020*-03, “Codification Improvements to Financial Instruments.” This ASU improves the Codification and amends the interaction of Topic842 and Topic326. ASU2016-13 and related amendments are effective for fiscal years beginning after* December 15, 2022,*with early adoption permitted. On an ongoing basis, the Company will contemplate forward-looking economic conditions in recording lifetime expected credit losses for the Company’s financial assets measured at cost.

Any new accounting standards,not disclosed above, that have been issued or proposed by FASB that donot require adoption until a future date arenot expected to have a material impact on the consolidated financial statements upon adoption.

Accounting Pronouncements Issued butnot yet Adopted

In* December 2023,the FASB issued ASU2023*-09, “Income Taxes (Topic740)—Improvements to Income Tax Disclosure” (“ASU2023-09”), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. ASU2023-09 is required to be adopted for annual periods beginning after* December 15, 2024,with early adoption permitted. The Company will adopt this accounting standard update effective January 1, 2025.The Company expects that the adoption of the standard willnot* have a material impact on our consolidated financial statements.

In* November 2023,the FASB issued ASU2023*-07, “Segment Reporting (Topic280) - Improvements to Reportable Segment Disclosures” (“ASU2023-07”), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. ASU2023-07 is required to be adopted for annual periods beginning after* December 15, 2023,and interim period within fiscal years beginning after December 15, 2024,with early adoption permitted. The Company will adopt this accounting standard update effective January 1, 2024.The Company expects that the adoption of the standard willnot* have a material impact on our consolidated financial statements.

Management has evaluated other recently issued accounting pronouncements and doesnot believe that any of these pronouncements will have a significant impact on the Company’s consolidated financial statements.

F-19

Note4. Acquisition

On* July 1, 2023,*the Company, along with Messrs. Fernandez and Barreto, exercised common stock purchase warrants issued by Progressive Care (“RXMD Warrants”) and were issued shares of Progressive Care common stock. The Company exercised RXMD Warrants on a cashless basis and was issued 402,269 shares of Progressive Care common stock. The Company also exercised RXMD Warrants on a cash basis and paid consideration in the amount of $506,000 and was issued 230,000 shares of Progressive Care common stock. Mr. Fernandez exercised RXMD Warrants on a cashless basis and was issued 211,470 shares of Progressive Care common stock. Mr. Barreto exercised RXMD Warrants on a cashless basis and was issued 130,571 shares of Progressive Care common stock. At the time of exercise, all of the above RXMD Warrants were in-the-money. After the exercise of the RXMD Warrants, the Company and Messrs. Fernandez and Barreto collectively owned approximately 53% of Progressive Care’s voting common stock.

Also, on* July 1, 2023,*the Company entered into a voting agreement with Messrs. Fernandez and Barreto, whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs. Fernandez and Barreto agreed to vote all of the shares of Progressive Care common stock (including any new shares of Progressive Care common stock acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Progressive Care common stock) that they own, directly or indirectly, in the same manner that the Company votes its shares of Progressive Care common stock and equivalents. The voting agreement is irrevocable and perpetual in term.

As a result of the RXMD Warrant exercises and the entry into the voting agreement, the Company concluded that there was a change in control in Progressive Care. As of* July 1, 2023,NextPlat has the right to control more than50* percent of the voting interests in Progressive Care through the concurrent common stock purchase warrant exercises and voting agreement noted above. Beginning on* July 1, 2023,the Company changed the accounting method for its investment in Progressive Care, which prior to July 1, 2023had been accounted for as an equity method investment to consolidation under the voting interest model in FASB ASC Topic805.* Therefore, Progressive Care became a consolidated subsidiary of the Company on* July 1, 2023.*

Progressive Care contributed revenues of approximately $26.8 million and a net loss of approximately $14.7 million to the Company for the period from* July 1, 2023to December 31, 2023.The following unaudited pro forma summary presents consolidated information of NextPlat Corp as if the business combination had occurred on January 1, 2023 (*in thousands).

The Company didnot have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.

F-20

The following table summarizes the consideration transferred to acquire a controlling interest in Progressive Care and the amounts of identified assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the noncontrolling interest in Progressive Care at the acquisition date (in thousands):

(1) Under federal tax law, previously unidentified finite lived intangible assets recognized from a business combination haveno tax basis and therefore arenot amortized for tax purposes. This tax position created a book/tax basis difference that was previouslynot recognized at* July 1, 2023,the date of the business combination transaction. Therefore, an approximate $4.0 million deferred tax liability measurement period adjustment was recorded at December 31, 2023as a result of the book/tax basis difference for the finite lived intangible assets. In addition the Company determined that the acquired deferred tax liability could be utilized to offset preexisting deferred tax assets. Therefore, in accordance with ASC805*-740-45-2, the Company released the deferred tax asset valuation allowance as a reduction to goodwill in the amount of approximately $4.0 million during the measurement period.

The total consideration is based on the fair value of the Company’s common stock outstanding at* July 1, 2023,which was 7,662,343 total implied shares outstanding and a fair market value of $4.45 per share, plus the fair value of warrants and options outstanding at July 1, 2023of approximately $5.8 million. Total implied shares outstanding at July 1, 2023consisted of 6,162,343 common shares outstanding and 1,500,000 Preferred Stock, Series B as converted on July 1, 2023.*

As a result of NextPlat obtaining control over Progressive Care, NextPlat’s previously held equity interest in Progressive Care was remeasured to fair value, resulting in a gain of approximately $11.4 million , which has been recognized in the line item “Gain on remeasurement of fair value of equity interest in affiliate prior to acquisition” on the condensed consolidated statements of comprehensive income (loss).

The fair value of the noncontrolling interest of approximately $23.2 million and the fair value of the previously held equity interest of approximately $16.7 million in Progressive Care were estimated by applying a market approach and an income approach, respectively. These fair value measurements of the noncontrolling interest and the previously held equity interest are based on significant inputsnot observable in the market, and thus represent Level3 measurements. The fair value estimates for the noncontrolling interest and the previously held equity interest are based on (1) an assumed discount rate range of 10% to 11%, (2) an assumed terminal value based on long-term sustainable growth rates of 3.0%,(3) assumed financial multiples of reporting entities deemed to be similar to Progressive Care, and (4) assumed adjustments because of the lack of control or lack of marketability, as relevant, that market participants would consider when estimating the fair value of the noncontrolling interest and the previously held equity interest in Progressive Care.

The goodwill is attributable to the workforce of the acquired business and the significant synergies expected to arise after NextPlat’s acquisition of a controlling interest in Progressive Care. The goodwill isnot deductible for tax purposes.

The initial recognition of the Progressive Care's identifiable intangible assets, resulting from the acquisition on* July 1, 2023and the application of push-down accounting, were measured using Level3* inputs. The fair value at the date of acquisition was approximately $15.7 million.

F-21

Note5. Fair Value

Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the followingthree levels of inputs that* may*be used to measure fair value:

Level1: Quoted prices in active markets for identical assets or liabilities.

Level2: Inputs other than Level1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that arenot active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level3: Unobservable inputs that are supported by little orno market activity and that are significant to the fair value of the assets and liabilities.

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

F-22

Note6. Revenue

e-Commerce revenue:

The Company recognizes revenue from satellite services when earned, as services are rendered or delivered to customers. Equipment sales revenue is recognized when the equipment is delivered to and accepted by the customer. Only equipment sales are subject to warranty. Historically, the Company hasnot incurred significant expenses for warranties. Equipment sales which have been prepaid, before the goods are shipped are recorded as contract liabilities and once shipped and accepted by the customer is recognized as revenue. The Company also records as contract liabilities, certain annual plans for airtime, which are paid in advance. Once airtime services are incurred, they are recognized as revenue. Unbilled revenue is recognized for airtime plans whereby the customer is invoiced for its data usage the following month after services are incurred.

Healthcare revenue:

The Company recognizes pharmacy revenue and340B contract revenue from dispensing prescription drugs at the time the drugs are physically delivered to a customer or when a customer picks up their prescription or purchases merchandise at the store, which is the point in time when control transfers to the customer. Each prescription claim is considered an arrangement with the customer and is a separate performance obligation. Payments are received directly from the customer at the point of sale, or the customers’ insurance provider is billed electronically. Forthird-party medical insurance and other claims, authorization is obtained to ensure payment from the customer’s insurance provider before the medication is dispensed to the customer. Authorization is obtained for these sales electronically and a corresponding authorization number is issued by the customers’ insurance provider.

The Company accrues an estimate of pharmacy benefit manager (“PBM”) fees, including direct and indirect remuneration (“DIR”) fees, which are assessed or expected to be assessed by payers at some point after adjudication of a claim, as a reduction of revenue at the time revenue is recognized. Changes in the estimate of such fees are recorded as an adjustment to revenue when the change becomes known.

The Company recognizes COVID-19 testing revenue when the tests are performed and results are delivered to the customer. Each test is considered an arrangement with the customer and is a separate performance obligation. Payment is generally received in advance from the customer.

The following table disaggregates net revenues by categories (in thousands):

F-23

Note7. Earnings (Loss) per Share

Net income (loss) per common share is calculated in accordance with Accounting Standards Codification (“ASC”) Topic260: Earnings per Share (“ASC260”). Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share doesnot include dilutive common stock equivalents in the weighted average shares outstanding as they would be anti-dilutive. In periods where the Company has a net loss, all dilutive securities are excluded. The components of basic and diluted EPS were as follows (in thousands, except per share data):

F-24

Note8. Accounts Receivable

At* December 31, 2023* and2022, accounts receivable consisted of the following (in thousands):

Bad debt expense was approximately $47,000 and $0 for thetwelve months ended* December 31, 2023and2022*, respectively.

The increase in accounts receivable was attributable to the consolidation of Progressive Care at* July 1, 2023.*

Note9. Accounts Receivable - Other, net

At* December 31, 2023* and2022, accounts receivable - other, net consisted of the following (in thousands):

Performance bonuses, paid annually by PBMs, are estimated based on historical pharmacy performance and prior payments received. Other receivables are loans to employees.

The increase in accounts receivable - other was attributable to the consolidation of Progressive Care at* July 1, 2023.*

Note10. Inventory

At* December 31, 2023* and2022, inventories consisted of the following (in thousands):

The increase in inventory was attributable to the consolidation of Progressive Care as of* July 1, 2023.*

F-25

Note11. VAT Receivable

On* January 1, 2021,VAT rules relating to imports and exports between the UK and EU changed as a result of the UK’s departure from the EU. As of December 31, 2023and2022*, the Company recorded a receivable in the amount of approximately $342,000 and$433,000, respectively, for amounts available to reclaim against the tax liability from UK and EU countries.

Note12. Prepaid Expenses

Prepaid expenses current and long term amounted to approximately $640,000 and $61,000, respectively at* December 31, 2023*, as compared to$46,000 and$49,000, respectively at* December 31, 2022*. Prepaid expenses include prepayments in cash for accounting fees, public company expenses, insurance, which are being amortized over the terms of their respective agreements, as well as cost associated with certain contract liabilities. The current portion consists of costs paid for future services which will occur within a year.

The increase in prepaid expenses was attributable to the consolidation of Progressive Care as of* July 1, 2023.*

Note13. Property and Equipment, net

Property and equipment consisted of the following (in thousands):

Depreciation expense was approximately $758,000 and $465,000 for thetwelve months ended* December 31, 2023and2022*, respectively.

The increase in property and equipment was attributable to the consolidation of Progressive Care as of* July 1, 2023.*

F-26

Note14. Goodwill and Intangible Assets, net

Goodwill

The following table reflects changes in the carrying amount of goodwill during the periods presented by reportable segments (in thousands):

The initial recognition of goodwill resulting from the acquisition of Progressive Care on* July 1, 2023.The Company performed an annual impairment test for goodwill as of December 31, 2023.*

The Company performed an annual impairment test as of* December 31, 2023,for our healthcare operations reporting segments. The fair value of each reporting unit was estimated using the income valuation approach. The income approach applied a fair value methodology to each reporting unit based on discounted cash flows. The various inputs to this fair value model are considered Level3.* This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internally-developed forecasts of revenue and profitability, estimation of the long-term rate of growth for the business, estimation of the useful life over which cash flows will occur, and determination of the weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used in the impairment test ranged from11% to13.5%.

As a result of the2023 annual impairment test, the Company concluded that the carrying amount of the Pharmacy Operations reporting unit goodwill exceeded its fair value by95% and recorded a non-cash goodwill impairment charge of approximately $13.9 million for the year ended* December 31, 2023.This was included in goodwill impairment charge on the Consolidated Statements of Operations for the year ended December**31,* 2023.

F-27

Intangible Assets

Intangible assets, net consisted of the following (in thousands):

Amortization of pharmacy records, trade names, developed technology, and customer contracts is included in depreciation and amortization in the accompanying Consolidated Statements of Comprehensive Income Loss. For thetwelve months ended* December 31, 2023and2022*, the Company recognized amortization expense of approximately $1.3 million and $25,000, respectively. Future amortization of intangible assets is as follows (in thousands):

F-28

Note15. Equity Method Investment

On* August 30, 2022,NextPlat entered into a Securities Purchase Agreement (the “SPA”) between NextPlat and Progressive Care, under which NextPlat, its Executive Chairman and Chief Executive Officer, Charles M. Fernandez, board member, Rodney Barreto, and certain other investors invested an aggregate of $8.3 million into Progressive Care. In connection with the SPA, NextPlat purchased 3,000 newly issued Units of Progressive Care valued at $6 million, with each Unit comprised ofone share of Progressive Care’s Series B Convertible Preferred Stock, $0.001 par value, andone Investor Warrant to purchase a share of Progressive Care Series B Convertible Preferred Stock at an exercise price of $2,000 The Investor Warrants may*also be exercised, in whole or in part, by means of a cashless exercise. The Progressive Care Series B Convertible Preferred Stock has a stated value of $2,000 per share and each share has the equivalent voting rights of 500 shares of Progressive Care common stock (after giving effect to the Reverse Stock Split described below). Each share of Progressive Care Series B Convertible Preferred Stock is convertible at any time at the option of the holder into shares of Progressive Care common stock determined by dividing the stated value by the conversion price which is $4.00 (after giving effect to the Reverse Stock Split described below). Also, pursuant to the SPA, Messrs. Fernandez and Barreto were nominated for election to Progressive Care’s Board of Directors.

In addition, on* August 30, 2022,NextPlat Corp, Messrs. Fernandez and Barreto, and certain other investors (collectively, the “NextPlat Investors”) entered into a Modification Agreement wherein the terms were modified for an existing Secured Convertible Promissory Note (the “Note”) originally held by athird* party note holder and sold to the NextPlat Investors. The NextPlat Investors purchased the Note as part of a Confidential Note Purchase and Release Agreement between the former note holder and the NextPlat Investors. As of the date of the SPA, the aggregate amount of principal and interest outstanding on the Note was approximately $2.8 million. As part of the Modification Agreement, various terms of the Note were modified, among them, the Conversion Price for the Note was modified to a fixed price of $4.00 per share of common stock (after giving effect to the Reverse Stock Split described below). In addition, the Note was modified to provide for mandatory conversion upon the later to occur of (a) the completion of the Company’s reverse stock split, and (b) the listing of the Company’s common stock on a national exchange, including the Nasdaq Capital Market, the Nasdaq Global Market, or the New York Stock Exchange.

On* September 13, 2022,the Progressive Care Board of Directors appointed Charles M. Fernandez as Chairman of the Board of Directors and Rodney Barreto as the Vice Chairman of the Board of Directors. In connection with these appointments, Alan Jay Weisberg, Progressive Care’s current Chairman and Chief Executive Officer, was appointed to serve as a Vice Chairman. On September 12, 2022,two of Progressive Care’s Directors, Birute Norkute and Oleg Firer, resigned as Directors. On October 7, 2022,*the Progressive Care Board of Directors unanimously voted to approve the appointment of Pedro Rodriguez, MD to the Board. Dr. Rodriguez was nominated to the Progressive Care Board by NextPlat.

On* November 11, 2022,*Mr. Weisberg resigned from his positions as Progressive Care’s Chief Executive Officer and co-Vice-Chairman of the Board of Directors. On the same date, the Board appointed Mr. Fernandez to serve as the new Chief Executive Officer immediately.

On* December 29, 2022,Progressive Care filed a Certificate of Amendment to Articles of Incorporation (the “Amendment to Articles”) with the Secretary of State of the State of Delaware. Pursuant to the Amendment to Articles, each 200 shares of Progressive Care’s common stock outstanding was converted intoone* share of common stock (the “Reverse Stock Split”) and the number of shares of common stock that Progressive Care is authorized to issue was reduced to 100 million (the “Reduction in Authorized Stock”). The Reverse Stock Split and the Reduction in Authorized Stock were approved by the Progressive Care Board of Directors and the shareholders.

On* May 5, 2023,NextPlat entered into a Securities Purchase Agreement (the “SPA”) with Progressive Care, pursuant to which the Company purchased 455,000 newly issued units of securities from Progressive Care (the “Units”) at a price per Unit of $2.20 for an aggregate purchase price of $1 million (the “Unit Purchase”). Each Unit consisted ofone* share of common stock, par value $0.0001 per share, of Progressive Care (“Common Stock”) andone warrant to purchase a share of Common Stock (the “PIPE Warrants”). The PIPE Warrants have athree-year term and are immediately exercisable at $2.20 per share of Common Stock. On* May 9, 2023,*NextPlat and Progressive Care closed the transactions contemplated in the SPA.

Simultaneous with the closing of the Unit Purchase on* May 9, 2023,Progressive Care entered into a Debt Conversion Agreement (the “DCA”) with NextPlat and the other holders (the “Holders”) of that certain Amended and Restated Secured Convertible Promissory Note, dated as of September 2, 2022,made by Progressive Care in the original face amount of approximately $2.8 million (the “Note”). Pursuant to the DCA, NextPlat and the other Holders agreed to convert the total approximately $2.9 million of outstanding principal and accrued and unpaid interest to Common Stock at a conversion price of $2.20 per share. NextPlat received 570,599 shares issued upon conversion of the Note. In addition, NextPlat received a warrant to purchaseone* share of Common Stock for each share of Common Stock they received upon conversion of the Note (the “Conversion Warrants”). The Conversion Warrants have athree-year term and are immediately exercisable at $2.20 per share of Common Stock.

At the same time, Progressive Care and NextPlat entered into a First Amendment (the “Amendment”) to that certain Securities Purchase Agreement dated* November 16, 2022 (*the “Debenture Purchase Agreement”). Under the Debenture Purchase Agreement, Progressive Care agreed to issue, and NextPlat Corp agreed to purchase, from time to time during thethree-year term of the Debenture Purchase Agreement, up to an aggregate of $10 million of secured convertible debentures from Progressive Care (the “Debentures”). Pursuant to the Amendment, NextPlat and Progressive Care agreed to amend the Debenture Purchase Agreement and the form of Debenture to have a conversion price of $2.20 per share. At present, no Debentures have been purchased by NextPlat under the Debenture Purchase Agreement.

As a result of the common stock purchase warrant exercises and the entry into the voting agreement as described in Note4, NextPlat concluded that there was a change in control in Progressive Care. As of* July 1, 2023,NextPlat has the right to control more than50* percent of the voting interests in Progressive Care through the concurrent common stock purchase warrant exercises and voting agreement. Beginning on* July 1, 2023,the Company changed the accounting method for its investment in Progressive Care, which prior to July 1, 2023had been accounted for as an equity method investment, to consolidation under the voting interest model in FASB ASC Topic805.* Therefore, Progressive Care became a consolidated subsidiary of the Company on* July 1, 2023.*

F-29

The following summarizes the Company’s consolidated balance sheet description equity method investment as follows as of* December 31, 2023* (in thousands):

The following summarizes the Company’s consolidated statements of operations and comprehensive loss description equity in net loss of affiliate for the year ended* December 31, 2023* as follows (in thousands):

Note16. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following (in thousands):

The increase in accounts payable and accrued expenses was attributable to the consolidation of Progressive Care at* July 1, 2023.*

F-30

Note17. Notes Payable

Notes payable consisted of the following (in thousands):

(A) Mortgage Note Payable – collateralized

In2018, Progressive Care closed on the purchase of land and building located at400 Ansin Boulevard, Hallandale Beach, Florida. The purchase price was financed in part through a mortgage note and security agreement entered into with a commercial lender in the amount of $1,530,000. The promissory note is collateralized by the land and building, bears interest at a fixed rate of 4.75% per annum, matures on* December 14, 2028and is subject to a prepayment penalty. Principal and interest will be repaid through 119 regular payments of $11,901 that began in January 2019,with the final payment of all principal and accrued interestnot* yet paid on* December 14, 2028.*Note repayment is guaranteed by Progressive Care Inc.

(B) Note Payable – Uncollateralized

As of* December 31, 2023* the uncollateralized note payable represents a non-interest-bearing loan that is due on demand from an investor.

(C) Notes Payable – Collateralized

On* July 16, 2020 (the “Issue Date”), GTC, entered into a Coronavirus Interruption Loan Agreement (“Debenture”) by and among the Company and HSBC UK Bank PLC (the “Lender”) for an amount of£250,000, or USD $338,343 at an exchange rate of GBP: USD of 1.3533720. The Debenture bears interest beginning July 16, 2021,at a rate of 4.0% per annum over the Bank of England Base Rate (0.1% as of July 16, 2020),payable monthly on the outstanding principal amount of the Debenture. The Debenture has a term of 6 years from the date of drawdown, July 15, 2026,the “Maturity Date”. Thefirst* repayment of£4,166.67 (exclusive of interest) was made13 month(s) after* July 16, 2020.Voluntary prepayments are allowed with5* business days’ written notice and the amount of the prepayment is equal to 10% or more of the limit or, if less, the balance of the debenture. The Debenture is secured by all GTC’s assets as well as a guarantee by the UK government. The proceeds from the Debenture were used for general corporate and working capital purposes. The Debenture includes customary events of default, including, among others: (i) non-payment of amounts due thereunder, (ii) non-compliance with covenants thereunder, (iii) bankruptcy or insolvency (each, an “Event of Default”). Upon the occurrence of an Event of Default, the Debenture becomes payable upon demand. The balance outstanding as of* December 31, 2023* on the note payable was approximately $165,000.

In* April 2021,Progressive Care entered into a note obligation with a commercial lender, the proceeds from which were used to purchase pharmacy equipment in the amount of approximately $30,000. During September 2021,pharmacy equipment was returned since the installation was cancelled and the note was amended. The amended promissory note payable requires 46 monthly payments of $331, including interest at 6.9%. The balance outstanding as of December 31, 2023* on the note payable was approximately $6,000.

In* July 2022,Progressive Care entered into a note obligation with a commercial lender, the proceeds from which were used to purchase pharmacy equipment in the amount of approximately $90,000. The terms of the promissory note payable require 60 monthly payments of $1,859, including interest at 8.78% starting January 2023.The balance outstanding on the note payable was approximately $71,000 as of December 31, 2023*.

In* September 2022,Progressive Care entered into a note obligation with a commercial lender, the proceeds from which were used to purchase a vehicle in the amount of approximately $25,000. The terms of the promissory note payable require 24 monthly payments of $1,143, including interest at 8.29% starting October 2022.The balance outstanding on the note payable was approximately $10,000 as of December 31, 2023*.

Principal outstanding as of* December 31, 2023*, is expected to be repayable as follows (in thousands):

F-31

Note18. Equity

Preferred Stock

We have authorized 3,333,333 shares of $0.0001 par value of preferred stock. No preferred stock was outstanding for any year presented.

Common Stock

We have authorized 50,000,000 shares of $0.0001 par value common stock. As of* December 31, 2023* and2022,18,724,596 and 14,402,025 shares, respectively, were issued and outstanding.

Capital Structure

On* May 28, 2021,the Company effected a reverse stock split of its common stock at a ratio of1*-for-5 (the “Reverse Split”).No fractional shares of common stock were issued as a result of the Reverse Split. Stockholders of record who were otherwise entitled to receive a fractional share received a whole share. The conversion or exercise prices of Company’s issued and outstanding convertible securities, stock options and warrants were adjusted accordingly. All information presented, assumes a1-for-5 reverse stock split of Company’s outstanding shares of common stock, and unless otherwise indicated, all such amounts and corresponding conversion price or exercise price data set forth have been adjusted to give effect to such assumed reverse stock split.

Listing on the Nasdaq Capital Market

Our common stock and warrants have been trading on the Nasdaq Capital Market under the symbols “NXPL” and “NXPLW,” respectively, since* January 21, 2022.Prior to January 21, 2022,*our common stock and warrants were traded on the Nasdaq Capital Market under the symbols “OSAT” and “OSATW,” respectively.

**** April 2023Private Placement of Common Stock**

On* April 5, 2023,the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale by the Company in a private placement of 3,428,571 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”). The offering price of the Common Stock was $1.75 per share, the closing price of the Common Stock on April 4, 2023.On April 11, 2023,the Private Placement closed. Upon the closing of the Private Placement, the Company received gross proceeds of approximately $6.0 million. The Company sold the Common Stock to the Investor in reliance on the exemption from registration afforded by Section4*(a)(2) of the Securities Act and Rule506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws. The Investor represented that it is acquiring the Common Stock for investment only andnot with a view towards, or for resale in connection with, the public sale or distribution thereof. Accordingly, the Common Stock hasnot been registered under the Securities Act and* may**not* be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

**** December 2022Private Placement of Common Stock (“** DecemberOffering**”)

On* December 9, 2022,*the Company entered into a securities purchase agreement with certain institutional and accredited investors for the sale by the Company in a private placement of 4,575,429 units, each unit comprising (i)one share of the Company’s common stock, and (ii)one warrant to purchaseone share of common stock. The offering price of the units was $1.75 per unit. The warrants included in the units are exercisable at a price of $1.75 per share and expire three years from the date of issuance.

The offering closed on* December 14, 2022,*and the Company received gross proceeds of approximately $8.0 million for the units. The Company intends to use the proceeds from the offering for working capital needs, potential acquisitions, joint ventures, and ongoing business transition activities.

On* December 9, 2022,the Company entered into placement agency agreement (the “Placement Agency Agreement”) with Dawson James Securities, Inc. (“Dawson James”) pursuant to which Dawson James agreed to serve as lead or managing placement agent on a best efforts, agency basis in connection with the private placement of the Units. The Company has agreed to pay Dawson James a placement agent fee of 6% of the gross proceeds received in the private placement and 3% on all proceeds from officers and directors including any directed orders from the Company. As additional compensation under the Placement Agency Agreement, the Company will issue Dawson James warrants (the “Placement Agent Warrants”) to purchase up to 549,051 shares of Common Stock with an exercise price of $1.75 per share. The Placement Agent Warrants are exercisable at any time and from time to time during thethree-year period commencing on thesix* month anniversary of the closing date.

**** January 2022Private Placement of Common Stock (“** JanuaryOffering**”)

On* January 2, 2022,*the Company finalized and closed a securities purchase agreement (the “Purchase Agreement”) in connection with the sale in a private placement by the Company of 2,229,950 shares of the Company’s common stock The purchase price for the common stock sold in the offering was $3.24 per share.

The Company received gross proceeds from the sale of the common stock of $7,225,038. Legal and registration fees amounted to $220,000, resulting in net proceeds of approximately $7.0 million. Prior to the private placement close, proceeds of approximately $1.4 million, were received and recorded as a stock subscription payable, for the year ended* December 31, 2022*. The Company intended to use the proceeds from the offering for general corporate purposes, including potential acquisitions and joint ventures. Approximately 73% of funds raised were secured from existing shareholders and from the members of the Company’s senior management and Board of Directors.

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Note19. Warrants

Underwriter Warrants

In addition to, but separate from, the registered warrants included in the units sold in the* JuneOffering, the Company issued 144,000 warrants to Maxim Group LLC, the underwriter (the “Underwriter Warrants”) in connection with the JuneOffering. The Underwriter Warrants expire five years from the effective date of the JuneOffering and are exercisable at a per share price equal to $5.50 per share, or 110% of the public offering price per unit in the June*Offering.

As of* December 31, 2023* and2022, there were 144,000 and 144,000 Underwriter Warrants issued and outstanding, respectively.

Placement Agent Warrants

On* December 9, 2022,pursuant to the December*Offering, the Company issued warrants to purchase 4,575,429 shares of common stock in an offering, at an exercise price of $1.75 and a term of 3 years.

In addition to, but separate from, the unregistered warrants included in the units sold in the* DecemberOffering, the Company issued 549,051 warrants to purchase shares of Common Stock with an exercise price of $1.75 per share, to its Placement Agent Dawson James Securities Inc. The Placement Agent Warrants are exercisable at any time and from time to time during thethree-year period commencing on thesix*-month anniversary of the closing date.

As of* December 31, 2023* and2022, there were 549,051 and 549,051 Placement Agent Warrants issued and outstanding, respectively.

Stock Based Compensation Warrants

For the year ended* December 31, 2023*, the Company granted warrants as stock based compensations valued at approximately $1.60 per warrant, using a Black-Scholes option pricing model with the following assumptions: stock price of $1.60 per share (based on closing price of the Company’s common stock on the date of grant), volatility of 507%, expected term of 3 years and a risk free interest rate of 4.47%. As of* December 31, 2023* and2022, there were 20,000 and 0 Stock Based Compensation Warrants issued and outstanding, respectively.

A summary of the status of the Company’s total outstanding warrants and changes during the year ended* December 31, 2023* is as follows:

As of* December 31, 2023*, and* December 31, 2022*, there were 7,569,572 and 7,654,572 warrants outstanding, respectively.

As of* December 31, 2022*, the Company had registered warrants of 2,386,092 of the 7,654,572 warrants issued and outstanding.

As of* December 31, 2023*, the Company had registered warrants of 2,386,092 of the 7,569,572 warrants issued and outstanding.

The Company determined that the warrants donot meet the definition of liability under FASB ASC Topic480 and therefore classified the warrants as equity instruments.

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Note20. Stock-Based compensation

For the years ended* December 31, 2023* and2022, stock-based compensation expense recognized in SG&A expenses was approximately $5.4 million and $3.0 million, respectively.

Stock Award Plans

The Company maintains stock incentive plans to attract, motivate and retain management, key employees, directors, and consultants. These plans provide for discretionary awards of, among others, stock options, stock awards, stock unit awards, and stock appreciation rights to participants (collectively, share-based awards).

Restricted Stock Awards

The following table summarizes our restricted stock awards activity:

As of* December 31, 2022*, there was approximately $2.3 million of net unrecognized compensation cost related to unvested stock-based compensation to be recognized over the remaining weighted average period of 1.40 years.

As of* December 31, 2023*, there was approximately $1.1 million of net unrecognized compensation cost related to unvested stock-based compensation to be recognized over the remaining weighted average period of 1.58 years.

Stock Options

Stock options outstanding at* December 31, 2023* and2022, as disclosed in the below table, have approximately ($4.4 million) and ($6.1 million) of intrinsic value, respectively.

A summary of the status of the Company’s outstanding stock options and changes during the years ended* December 31, 2023* and2022, is as follows:

For the year ended* December 31, 2022*, the Company granted 190,000 stock options valued at approximately $1.10 - $1.92 per option, using a Black-Scholes option pricing model with the following assumptions: stock price of $1.71 - $2.20 per share (based on closing price of the Company’s common stock on the date of grant), volatility of 75% -100%, expected term of 5 to 10 years and a risk free interest rate of 2.66% to 4.39%.

For the year ended* December 31, 2023*, the Company granted 395,000 stock options valued at approximately $1.98-$2.64 per option, using a Black-Scholes option pricing model with the following assumptions: stock price of $1.98-$2.64 per share (based on closing price of the Company’s common stock on the date of grant), volatility of 502%-504%, expected term of 2-5 years, and a risk free interest rate of 3.31%-3.71%.

As of* December 31, 2022*, there was approximately $1.4 million of net unrecognized compensation cost related to unvested stock options to be recognized over the remaining weighted average period of 3.73 years.

As of* December 31, 2023*, there was approximately $1.4 million of net unrecognized compensation cost related to unvested stock options to be recognized over the remaining weighted average period of 2.88 years.

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Note21. Income Taxes

The Company accounts for income taxes under ASC Topic740: Income Taxes which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards. ASC Topic740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.

The tax reform bill that Congress voted to approve* December 20, 2017,also known as the “Tax Cuts and Jobs Act”, made sweeping modifications to the Internal Revenue Code, including a much lower corporate tax rate, changes to credits and deductions, and a move to a territorial system for corporations that have overseas earnings. The act replaced the prior-law graduated corporate tax rate, which taxed income over$10.0* million at35%, with a flat rate of21%. Due to the continuing loss position of the Company, such changes shouldnot be material.

For U.S. purposes, the Company hasnot completed its evaluation of NOL utilization limitations under Internal Revenue Code, as amended (the “Code”) Section382, change of ownership rules. If the Company has had a change in ownership, the NOL’s would be limited as to the amount that could be utilized each year, or possibly eliminated, based on the Code. The Company has also,not completed its review of NOL’s pertaining to years the Company was known as “Silver Horn Mining Ltd.” and “Great West Resources, Inc.”, which* may**not* be available due to IRC Section382 and because of a change in business line that* mayeliminate NOL’s associated with ““Silver Horn Mining Ltd.” and “Great West Resources, Inc.” The company has alsonot* reviewed the impact relating to “Recent Events” for its IRC Section382 possible NOL’s limitation.

The components of earnings before income taxes for the years ended* December 31, 2023* and2022 were as follows (in thousands):

Income tax provision (benefit) consists of the following for the years ended* December 31, 2023* and2022 (in thousands):

The Company’s wholly owned subsidiary, GTC, is a United Kingdom (“UK”) Limited Company and files tax returns in the UK. Its estimated tax liability for* December 31, 2023* and2022 is approximately $60,000 and $87,000, respectively.

Progressive Care's estimated tax liability for* December 31, 2023* is approximately $0.

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A reconciliation of the income tax provision (benefit) by applying the statutory United States federal income tax rate to income (loss) before income taxes is as follows (in thousands):

Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset is as follows (in thousands):

Nextplat Corp's net operating loss carryforward increased from approximately $14.8 million at* December 31, 2022* to $17.8 million at* December 31, 2023*. After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at* December 31, 2023* and2022, due to the uncertainty of realizing the deferred income tax assets. The change in the valuation allowance for2023 was approximately $2.2 million. Out of the approximately*$17.8* million net operating losses carry forward, approximately $2.9 million will begin to expire in2036 and approximately $14.9 million will have an indefinite life.

Progressive Care'snet operating loss carryforward decreased from approximately $14.4 million at* December 31, 2022to $14.1 million at December 31, 2023.After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2023and2022,* due to the uncertainty of realizing the deferred income tax assets. The change in the valuation allowance for2023 was an increase of approximately $1.7 million, exclusive of the approximate $4.0 million reversal of the valuation allowance attributable to the business combination. Out of the approximately*$13.8* million net operating losses carry forward, approximately $2.8 million will begin to expire in2032 and approximately $11.0 million will have an indefinite life.

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The Internal Revenue Code includes a provision, referred to as Global Intangible Low-Taxed Income (“GILTI”), which provides for a10.5% tax on certain income of controlled foreign corporations. We have elected to account for GILTI as a period cost if and when occurred, rather than recognizing deferred taxes for basis differences expected to reverse.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. U.S. federal income tax returns for 2020 and after remain open to examination. We and our subsidiaries are also subject to income tax in multiple states and foreign jurisdictions. Generally, foreign income tax returns after 2019 remain open to examination.No income tax returns are currently under examination. As of* December 31, 2023* and2022, the Company doesnot have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes. The Company recognizes penalties and interest related to unrecognized tax benefits as income tax expense. For the years ended* December 31, 2023* and2022, there wereno penalties or interest recorded in income tax expense.

Note22. Leases

The Company has entered into a number of lease arrangements under which the Company is the lessee. These leases are classified as operating leases. In addition, the Company has elected the short-term lease practical expedient in ASC Topic842 related to real estate leases with terms ofone year. The following is a summary of the Company’s lease arrangements.

Finance Lease Agreements

In* May 2018,Progressive Care entered into a finance lease obligation to purchase pharmacy equipment with a cost of approximately $115,000. The terms of the lease agreement require monthly payments of approximately $1,700 plus applicable tax over 84 months ending March 2025*including interest at the rate of 6%.

In* December 2020,Progressive Care entered into an interest-free finance lease obligation to purchase computer servers with a cost of approximately $51,000. The terms of the lease agreement require monthly payments of approximately $1,400 plus applicable tax over 36 months ending November 2023.*

Operating Lease Agreements

On* December 2, 2021,Nextplat entered into a 62-month lease for 4,141 square feet of office space in Florida ("Florida lease"), for approximately $186,000 annually. The rent increases 3% annually. The lease commenced upon occupancy on June 13, 2022,and will expire on August 31, 2027.The Florida lease doesnot* require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees.

For our facilities in Poole, England, we rent office and warehouse space of approximately 2,660 square feet for£30,000 annually or approximately USD $37,100, based on a yearly average exchange rate of 1.24 GBP: USD. The Poole lease was renewed on* October 6, 2022,and expired October 31, 2023*and renewed for an additional twelve months.

Progressive Care entered into a lease agreement for its Orlando pharmacy in* August 2020.The term of the lease is 66 months with a termination date of February 2026.The lease agreement calls for monthly payments that began in February 2021,*of $4,310, with an escalating payment schedule each year thereafter.

Progressive Care leases its North Miami Beach pharmacy location under an operating lease agreement with a lease commencement date in* September 2021.The term of the lease is 60 months with a termination date in August 2026.*The lease calls for monthly payments of $5,237, with an escalating payment schedule each year thereafter.

Progressive Care also leases its Palm Beach County pharmacy locations under operating lease agreements expiring in* February 2024.*

During* June 2023Nextplat entered into a 36-months lease to leasetwenty-five* (25) hours in a Phenom300 aircraft, for approximately $200,650 annually. The rent increases 3% annually. The lease commenced on* June 7, 2023,and will expire on June 6, 2026.*

Variable expenses generally represent the Company’s share of the landlord’s operating expenses.

Right of use assets for operating leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. As of* December 31, 2023and2022*, we havenot recognized any impairment losses for our ROU assets.

We monitor for events or changes in circumstances that require a reassessment ofone of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

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We recognized lease costs associated with all leases as follows (in thousands):

Supplemental cash flow information related to leases was as follows (in thousand):

Supplemental balance sheet information related to leases was as follows (in thousands):

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Future minimum lease payments are as follows (in thousands):

Note23. ** Reportable Segments**

The Company hastwo reportable segments: (i) e-Commerce Operations, which involves acquiring and leasing, primarily an e-commerce platform to collaborate with businesses to optimize their ability to sell their goods online, domestically, and internationally, and enabling customers and partners to optimize their e-commerce presence and revenue, and other related businesses and (ii) Healthcare Operations, which provides TPA, data management, COVID-19 related diagnostics and vaccinations, prescription pharmaceuticals, compounded medications, telepharmacy services, anti-retroviral medications, medication therapy management, the supply of prescription medications to long-term care facilities, medication adherence packaging, contracted pharmacy services for340B covered entities under the340B Drug Discount Pricing Program, and health practice risk management.

The Company evaluates the performance of each of the segments based on profit or loss after general and administrative expenses. While the Company believes there are synergies between thetwo business segments, the segments are managed separately because each requires different business strategies.

The following tables present a summary of the reportable segments (in thousands):

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Capital expenditures for the year ended* December 31, 2023*were approximately $109,000 for e-Commerce Operations and $538,000 for Healthcare Operations.

Note24. Commitments and Contingencies

Litigation

On* June 22, 2021,Thomas Seifert’s employment as the Company’s Chief Financial Officer was terminated for cause. Mr. Seifert asserts that the termination wasnot* for cause and that he is owed compensation payable under his* June 2, 2021employment agreement. The Company’s position is that Mr. Seifert isnot* owed any additional compensation relating to his prior service with the Company or arising under any employment agreement. The Company and Mr. Seifert are currently engaged in litigation over the matter of his employment and termination. The Company believes it has adequate defenses to Mr. Seifert’s claims and has asserted affirmative claims for relief against Mr. Seifert including, butnot limited to, breach of the employment agreement, breach of his fiduciary duties, fraud in the inducement in connection with the employment agreement, fraudulent misrepresentation, and constructive fraud. A detailed recitation of the Company’s factual allegations supporting these claims can be found in the Company’s Second Amended Complaint, filed* June 21, 2022.The Company doesnot* expect to seek substantial monetary relief in the litigation. This dispute is pending before the District Court for the Southern District of Florida under CaseNo. 1:21-cv-22436-DPG.

On* July 5, 2022,Mr. Seifert moved to dismiss NextPlat’s Second Amended Complaint, and filed a Counterclaim against the Company and its Chief Executive Officer, Charles M. Fernandez. In his Counterclaim, Mr. Seifert seeks legal remedies in connection with the Company’s June 22, 2021,*termination of his employment. Mr. Seifert also claims Retaliatory Discharge under Florida’s Private Whistleblower Act, Defamation, and Negligent Misrepresentation.

A jury trial is set to occur during the trial court'stwo-week trial calendar, starting* August 21, 2024.*

From time to time, the Company* maybecome involved in litigation relating to claims arising out of our operations in the normal course of business. The Company isnot* currently involved in any pending legal proceeding or litigation, and, to the best of our knowledge,no governmental authority is contemplating any proceeding to which the Company is a party or to which any of the Company’s properties is subject, which would reasonably be likely to have a material adverse effect on the Company’s business, financial condition and operating results.

Note25. Related Party Transactions

As of* December 31, 2023*, the accounts payable due to related party includes amounts due to David Phipps. Total related party payments due as of* December 31, 2023* and* December 31, 2022* are $8,000 and $720 respectively. Those related party payables are non-interest bearing and due on demand.

The Company uses an American Express account for Orbital Satcom Corp and an American Express account for GTC, both in the name of David Phipps who personally guarantees the balance owed.

For the year ended* December 31, 2023* and2022, the Company employedtwo individuals related to Mr. Phipps with gross wages totaling approximately $78,000 and $56,000, respectively.

On* July 12, 2022,the Company hired Lauren Sturges Fernandez, the spouse of Mr. Fernandez, as Manager of Digital Assets. Mrs. Fernandez is an at-will employee with an annual salary of $95,000. On September 22, 2022,Mrs. Fernandez’s title was changed to Chief of Staff and Special Assistant to the Chairman of the Board, withno* change to her salary. Previously Mrs. Fernandez was a consultant and earned compensation for her services of $10,995 for the year ended* December 31, 2022.In April 2023,*Mrs. Fernandez’s annual salary increased to $125,000, which was approved by the Board of Directors.

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** JanuaryOffering. The Company received gross proceeds from the sale of the Common Stock in the* JanuaryOffering of approximately $7.2 million, which closed on January 5, 2022.*Approximately 73% of funds raised in the Offering were secured from existing shareholders, and from members of the Company’s senior management and Board of Directors. The following table represents the related party investment:

On* January 20, 2022,the Company appointed Rodney Barreto, to its Board. Mr. Barreto was a participant of the January*offering and purchased 370,701 shares of common stock for $3.24 per share or approximately $1.2 million. Mr. Barreto’s investment represented 17% of the total.

Progressive Care Inc. Following the consummation of the Company’s investment in Progressive Care Inc. on* September 2, 2022,our Chairman and Chief Executive Officer, Charles M. Fernandez, and our board member, Rodney Barreto, were appointed to Progressive Care’s Board of Directors, with Mr. Fernandez appointed to serve as Chairman of Progressive Care’s Board of Directors and Mr. Barreto appointed to serve as a Vice Chairman of Progressive Care’s Board of Directors. On November 11, 2022,the Progressive Care board of directors elected Mr. Fernandez as the Chief Executive Officer of Progressive Care. In addition, on September 2, 2022,NextPlat, Messrs. Fernandez and Barreto and certain other purchasers purchased from Iliad Research and Trading, L.P. (“Iliad”) a Secured Convertible Promissory Note, dated March 6, 2019,made by Progressive Care to Iliad (the “Note”). The accrued and unpaid principal and interest under the note at the time of the purchase was approximately $2.8 million. The aggregate purchase price paid to Iliad for the Note was $2.3 Million of which NextPlat contributed $1.0 million and Messrs. Fernandez and Barreto contributed $400,000 each (the “Note Purchase”). In connection with the Note Purchase, NextPlat, Messrs. Fernandez and Barreto and the other purchasers of the Note entered into a Debt Modification Agreement with Progressive Care. In consideration of the concessions in the Debt Modification Agreement, Progressive Care issued 105,000 shares of its common stock to the purchasers of the Note, of which NextPlat, Charles Fernandez and Rodney Barreto, received 45,653,18,261, and 18,261 shares, respectively, in each case after giving effect to a1*-for-200 reverse stock split enacted by Progressive Care on* December 30, 2022.*

On* February 1, 2023,the Company entered into a Management Services Agreement with Progressive Care Inc. (“Progressive Care”) to provide certain management and administrative services to Progressive Care for a $25,000 per month fee. During May 2023the management fee was reduced to $20,000 per month. During thetwelve* months ended* December 31, 2023* , the Company received $235,000 from Progressive Care as management fees. The management fees in the amount of $120,000 for thesix months ended* December 31, 2023are eliminated as a result of the Progressive Care consolidation as of July 1, 2023.*

On* May 5, 2023,the Company entered into an SPA with Progressive Care Inc., pursuant to which the Company agreed to purchase 455,000 newly issued Units of securities from Progressive Care at a price per Unit of $2.20 for an aggregate purchase price of $1.0 million (the “Unit Purchase”). Each Unit consists ofone* share of common stock, par value $0.0001 per share, Common Stock andone common stock purchase warrant to purchase a share of Common Stock (the “PIPE Warrants”).

On* May 9, 2023,pursuant to the DCA, the Company received 570,599 shares, Charles M. Fernandez received 228,240 shares, and Rodney Barreto received 228,240 shares. To induce the approval of the debt conversion pursuant to the DCA, Messrs. Fernandez and Barreto received Inducement Warrants to purchase 190,000 and 30,000 shares of Common Stock, respectively. In addition, the Company and Messrs. Fernandez and Barreto also received a common stock purchase warrant to purchaseone* share of Common Stock for each share of Common Stock they received upon conversion of the Note.

On* July 1, 2023,*the Company, Charles M. Fernandez, and Rodney Barreto exercised common stock purchase warrants and were issued common stock shares by Progressive Care (the "RXMD Warrants"). The Company exercised common stock purchase warrants on a cashless basis and was issued 402,269 common stock shares. The Company also exercised common stock purchase warrants on a cash basis and paid consideration in the amount of $506,000 and was issued 230,000 common stock shares. Mr. Fernandez exercised common stock purchase warrants on a cashless basis and was issued 211,470 common stock shares. Mr. Barreto exercised common stock purchase warrants on a cashless basis and was issued 130,571 common stock shares. After the exercise of the RXMD Warrants, NextPlat and Messrs. Fernandez and Barreto collectively owned approximately 53% of Progressive Care’s voting common stock.

Also, on* July 1, 2023,*NextPlat and Messrs. Fernandez and Barreto, entered into a voting agreement whereby at any annual or special shareholders meeting of Progressive Care’s stockholders, and whenever the holders of Progressive Care’s common stock act by written consent, Messrs. Fernandez and Barreto agreed to vote all of the shares of Progressive Care common stock (including any new shares acquired after the date of the voting agreement or acquired through the conversion of securities convertible into Progressive Care common stock) that they own, directly or indirectly, in the same manner that NextPlat votes its shares of Progressive Care common stock. The voting agreement is irrevocable and perpetual in term.

Next Borough Capital Fund, LP. On* July 7, 2023,the Company entered into an unsecured promissory note agreement with Next Borough Capital Management, LLC (“the Borrower”), whereby the Company loaned $250,000 to the Borrower. The note bears interest at an annual rate of 7%. The outstanding principal balance of the note plus all accrued unpaid interest is due and payable on July 7, 2024,the Maturity Date. Each of the Company, Charles M. Fernandez, Robert D. Keyser, Jr., eAperion Partners, LLC and a revocable trust of Rodney Barreto are members of the Borrower. The balance outstanding on the note as of December 31, 2023* was approximately $256,000. The note is recorded in Notes Receivable Due From Related Party on the Balance Sheets.

** DecemberOffering. On* December 14, 2022,*the Company closed a private placement for the sale of 4,575,429 units (each, a “Unit”), each Unit consisting of (i)one share of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), and (ii)one warrant to purchaseone share of Common Stock (each, a “Warrant”). The offering price of the Units was $1.75 per Unit. The Warrants included in the Units are exercisable at a price of $1.75 per share and expire three years from the date of issuance. Related party investment represented 48%, of the approximately $8.0 million of the funds raised.

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Note26. Concentrations

e-Commerce operations concentrations:

Customers:

Amazon accounted for 51.6% and 54.3% of the Company’s revenues during the years ended* December 31, 2023* and2022, respectively.No other customer accounted for10% or more of the Company’s revenues for either period.

Suppliers:

The following table sets forth information as to each supplier that accounted for10% or more of the Company’s purchases for the years ended* December 31, 2023* and2022 (in thousands):

Geographic:

The following table sets forth revenue as to each geographic location, for the years ended* December 31, 2023* and2022(in thousands):

Healthcare operations concentrations:

Suppliers:

Progressive Care had significant concentrations withone vendor. The purchases from this significant vendor were approximately 99.0% of total vendor purchases for thesix months ended* December 31, 2023*.

Customers:

Progressive Care s trade receivables are primarily from prescription medications billed to various insurance providers. Ultimately, the insured is responsible for payment should the insurance companynot reimburse Progressive Care.

Progressive Care generated reimbursements fromthree significant PBMs for thesix months ended* December 31, 2023*:

Note27. Subsequent Events

On* March 25, 2024,the Company entered into a Stock Purchase Agreement with James T. McKinley to purchase all of the issued and outstanding shares of common stock of Outfitter Satellite, Inc., a Tennessee corporation ("Outfitter"), for aggregate consideration of $760,000 subject to adjustment (the "Outfitter Acquisition"). The closing of the Outfitter Acquisition occurred on April 1, 2024.*Outfitter provides consumers, commercial and government customers, with advanced satellite-based connectivity solutions from leading brands, including Iridium, Inmarsat and Globalstar.