UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-K
 
 þ
              ANNUAL REPORT UNDER SECTION 13
      OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934
 
 For the
fiscal year ended: February 28,
2010
 
  ̈
              TRANSITION REPORT UNDER SECTION
      13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934
 
 For the
transition period from ________ to ________
 
 Commission
File No. 000-52669
 
 NEXT
1 INTERACTIVE, INC.
 (Exact
name of registrant as specified in its charter)
 
 Nevada
                        
                        26-3509845(State
      or other jurisdiction of
                        
                        (I.R.S.
      employerincorporation
      or formation)
                        
                        identification
      number)
 
 2400
      N Commerce Parkway, Suite 105Weston,
      FL 33326(Address
      of principal executive offices)
 
 (954)
888-9779
 (Registrant’s
telephone number, including area code)
 
 Securities
registered under Section 12(b) of the Exchange Act: None
 
 Securities
registered under Section 12(g) of the Exchange Act:
 
 Common Stock, $0.00001 par
value per share
 (Title of
Class)
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes  ̈  No þ
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes  ̈  No þ
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.  Yes þ  No  ̈
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes  ̈  No  ̈
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.    ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,”
“non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act. (Check one):
  Large
      accelerated filer
              
               ̈
              Accelerated
      filer
              
               ̈Non-accelerated
      filer
              
               ̈
              Smaller
      reporting company
              
              þ
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  ̈ No þ
 
 Issuer’s
revenue for its most recent fiscal year was approximately
$1,320,000.
  The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant on June 7, 2010, based on a closing price of
$0.53 was approximately $13,960,293. As of June 7, 2010, the registrant had
33,305,626 shares of its common stock, par value $0.00001 per share,
outstanding.
  
  TABLE OF
CONTENTS
 
 Item:
                          
                          Page No.:PART
      I
                          
                          
                          
                          4Item
      1.
                          
                          Business.
                          
                          4Item
      1A.
                          
                          Risk
      Factors.
                          
                          15Item
      1B.
                          
                          Unresolved
      Staff Comments.
                          
                          21Item
      2.
                          
                          Properties.
                          
                          21Item
      3.
                          
                          Legal
      Proceedings.
                          
                          21Item
      4.
                          
                          (Removed
      and Reserved).
                          
                          21PART
      II
                          
                          
                          
                          22Item
      5.
                          
                          Market for
      Registrant’s Common Equity, Related Stockholders Matters and
      Issuer Purchases of Equity
Securities.
                          
                          22Item
      6.
                          
                          Selected
      Financial Data.
                          
                          24Item
      7.
                          
                          Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                          
                          25Item
      7A.
                          
                          Quantitative
      and Qualitative Disclosures About Market Risk.
                          
                          37Item
      8.
                          
                          Financial
      Statements and Supplementary Data.
                          
                          F-1Item
      9.
                          
                          Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure.
                          
                          38Item
      9A
                          
                          Controls
      and Procedures (ITEM 9A(T))
                          
                          39Item
      9B.
                          
                          Other
      Information.
                          
                          40PART
      III
                          
                          
                          
                          40Item
      10.
                          
                          Directors,
      Executive Officers and Corporate Governance.
                          
                          40Item
      11.
                          
                          Executive
      Compensation.
                          
                          43Item
      12.
                          
                          Security Ownership
      of Certain Beneficial Owners and Management and
      Related Stockholders Matters.
                          
                          44Item
      13.
                          
                          Certain
      Relationships and Related Transactions, and Director
      Independence.
                          
                          45Item
      14.
                          
                          Principal
      Accountant Fees and Services.
                          
                          47PART
      IV
                          
                          
                          
                          48Item
      15.
                          
                          Exhibits
      and Financial Statement Schedules.
                          
                          48SIGNATURES
                          
                          49
  2
 
 FORWARD-LOOKING
STATEMENTS
 
 Certain
statements made in this Annual Report on Form 10-K are “forward-looking
statements” regarding the plans and objectives of management for future
operations. Such statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements of the
registrant to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. The
forward-looking statements included herein are based on current expectations
that involve numerous risks and uncertainties. The Registrant’s plans and
objectives are based, in part, on assumptions involving the continued expansion
of business. Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Registrant. Although the Registrant believes its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance the forward-looking
statements included in this Report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Registrant or any other person that the objectives and
plans of the Registrant will be achieved.
 
 Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Our expectations are as of the date this Form 10-K is filed,
and we do not intend to update any of the forward-looking statements after the
filing date to conform these statements to actual results, unless required by
law.
 
 We file
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and proxy and information statements and amendments to reports filed or
furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of
1934, as amended. You may read and copy these materials at the SEC’s Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain
information on the operation of the public reference room by calling the SEC at
1-800-SEC-0330. The SEC also maintains a website (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding us and other companies that file materials with the SEC
electronically.
  3
 
 PART
I
 
 Item
1. Business
 
 Organizational
History
 
 Our
predecessor, Maximus Exploration Corporation was incorporated in the state of
Nevada on December 29, 2005 and was a reporting shell company (“Maximus”).
Extraordinary Vacations Group, Inc. (“EXVG”) was incorporated in the state of
Nevada, June 2004, and its wholly-owned subsidiary Extraordinary Vacations USA
Inc. (“EVUSA”). EVUSA is a Delaware corporation, incorporated on June 24, 2002
and has been operating since such date. On October 9, 2008, EXVG agreed to sell
100% of EVUSA to Maximus and consummated a reverse merger with
Maximus.  Maximus then changed its name to Next 1 Interactive, Inc.
(“Next 1” or “Company”). The transaction is described below.
 
 Pursuant
to a Stock Purchase Agreement, dated September 24, 2008, between Andriv
Volianuk, a 90.7% stockholder of Maximus; EXVG and EVUSA, Mr. Volianuk sold his
5,000,000 shares of Maximus common stock, representing 100% of his shares, to
EXVG for an aggregate purchase price of $200,000. After the sale, Mr. Volianuk
did not own any shares of Maximus. EXVG then reissued the 5,000,000 Maximus
shares to the management of EXVG in exchange for the cancellation of their
preferred and common stock of EXVG under the same terms and conditions as that
offered to EXVG shareholders.
 
 Pursuant
to a Share Exchange Agreement, dated October 9, 2008, between
Maximus,  EXVG and EVUSA, EXVG exchanged 100% of its shares in EVUSA
(the “EVUSA Shares”) for 13 million shares of common stock of Maximus (the
“Share Exchange”), resulting in EXVG becoming the majority shareholder of
Maximus. EXVG then proceeded to distribute the 13 million shares of Maximus
common stock to the stockholders of EXVG (“EXVG Stockholders”),  and
the management of EXVG, on a pro rata basis. As a result of these transactions,
EVUSA became a wholly-owned subsidiary of Maximus.  Maximus then
amended its Certificate of Incorporation to change its name to Next 1 and to
authorize 200,000,000 shares of common stock, par value $0.00001 per share, and
100,000,000 shares of preferred stock, par value $0.00001 per share. Such
transactions are hereinafter referred to as the “Acquisition.”
 
 The
purpose of the Acquisition was so that Next 1 would become a fully reporting
company with the Securities and Exchange Commission and have our stock quoted on
the OTC Bulletin Board.
 
 At the
time of the Acquisition, there were 18,511,500 shares of common stock of Next 1
issued and outstanding, of which 13,000,000 were held by the EXVG Stockholders
and 5,000,000 were held by the management of Next 1 and 511,500 shares by the
Company’s investors.  Of the 13,000,000 shares held by the former
stockholders of EXVG, 5,646,765 shares were held by the executive officers and
directors of Next 1.
 
 On
October 29, 2008, Next 1 acquired two companies: Home Preview Channel (HPC) and
Loop Networks, Inc (Loop) by issuing 6.1 million shares and assuming certain
debts. The Home Preview Channel was a cable television network with Master
Carriage licenses for both Comcast and Time Warner and with distribution at the
time into approximately 1.6 million homes. Loop oversaw the development of the
HPC operating technology as well as certain proprietary automated systems that
can be used to expand on-demand capabilities for the Home Preview
Channel. This technological solution allowed for large quantities of data
content (i.e. home listings, information, and pictures) to be ingested into the
system and then be moved over the internet to the cable head-end and be
reassembled in TV quality video format, thus providing the Company with a unique
solution for cable television and internet interface.
 
 On August
17, 2009, we entered into an asset purchase agreement with Televisual Media
Works, LLC whereby we purchased certain rights, trademarks and other intangible
property of Resort and Residence TV, a wholly owned subsidiary of Televisual
Media.
 
 Executive
Offices and Telephone Number
 
 Our
principal executive offices are located at 2400 N Commerce Parkway, Weston,
Florida 33326 and our telephone number is (954) 888-9779.
  Our web
hosting operations are based in Florida and at Rackspace Hosting, Inc., an off
site hosting facility.
 
 4
  Our
Business
 
 Next 1is a multi-faceted interactive media
company whose key focus isaround two of the most universal, yet
powerful consumer-passion categories - real estate and travel. The Company
delivers targeted content via digital platforms including Satellite, Cable,
Broadcast, Broadband, Web, Print and Mobile. Its media platforms include a 24/7
full time lifestyle programming TV Network called “R&R
TV”, a real estate
Video-On-Demand (“VOD”) channel calledHome TV on Demand
(“Home TV”), a web radio
network called “R&R
Radio” and multiple
websites including “RRTV.com”which features live streaming of its
television network over the web.
 
 Next 1
has expended significant capital over the past two years in the creation of its
interactive media platforms. The Company is targeting to have all platforms
operational by the third quarter of fiscal 2011.  The platforms will
allow the Company to capture multiple revenue streams including transactional
commissions, referral fees, advertising and sponsorships. These media platforms
have been designed to address the Advertisers' and Marketers’ needs to
provide compelling content and a delivery system in the emerging convergent
landscape of the web, television and mobile platforms. Additionally, these
integrated media platforms provide for the delivery of measurable return on
investment to its advertisers, sponsors and business partners.
 
 The most
expensive media platforms to roll out have been the television properties. This
includes the full-time R&R television programming network and the Home TV
real estate channel.  The television properties are the key platforms
that differentiate the Company. The ability to launch a full time TV network
with over 25 million households and an exclusive nationwide real estate VOD
channel to 15 million households is unusual in the television industry. The
price of entry, the programming and advertising needs and the opportunity to
enhance the full time networks with interactive TV applications and VOD is truly
unique.
 
 Additionally
the Company has differentiated itself from other media companies through its
ownership and operation of businesses in its verticals - travel and real
estate.  These businesses not only afford the Company multiple
industry relationships and affiliations, but further provide industry licenses
that will allow the Company to capture sales commissions and referral fees from
products advertised and sold through its media platforms. This is a distinct
advantage that will provide new revenue streams in addition to the traditional
marketing and advertising revenues that are not available to TV
networks.  The Company’s executive team has extensive backgrounds in
the travel and real estate/property development space and has been augmented by
experienced media developers and marketers.
 
 The
Company has structured itself to allow it to carefully control its expenses and
share costs between its distinct business units. The roll out, promotion and
marketing of its various business units and media are inter-related and cross
promoted. This allows the Company to control its G & A and to leverage the
strength of its executive and sales teams for all of its media platforms. Our
sales force has been trained to understand the key benefits of all of the
Company’s holdings allowing it to sell advertising, sponsorships, proprietary
group travel, affinity programs and services.
 
 Media
Division:
 
 1.
              R&R
      TV, Inc.: A full time 24/7 programming
network
 
 R&R
is the first television network specifically designed to combine targeted
lifestyle, travel and real estate programming with state-of-the-art interactive
advertising and transactional shopping components. Marketers can reach consumers
in ways that were not available a few short years ago. The R&R TV Networkroots
came from the Home Preview
Channel®which was originally a
24-hour digital cable TV network that was distributed into 1.6 million homes in
Houston and Detroit through Comcast. The Network provided cost effective
advertising solutions for local realtors. Next 1 secured permission from the
cable operator to change the programming format and re-brand HPC to the R&R
TV Network.  The R&R network was launched on November 6th 2009
with Comcast and DIRECTV bringing it into roughly 21 million households. In
March 2010 the Company announced a further expansion to 28 million homes with
Capital Broadcasting Corporation and is planning to reach 60 million households
by the end of fiscal 2011.
  5
 
 R&R
has expanded its regular programming to include over 60 independent series of
shows that are aired in network programming blocks including:
 
 ·
              Planet
      Golf
 ·
              Outdoor
      Adventure
 ·
              Culinary
      Destinations
 ·
              Home
      Style
 ·
              Travel
      the World
 ·
              Real
      Estate
 
 Additionally
the Network has monthly themes where all programming, tips, contests, events,
news updates, movies, travel and home opportunities and of course great vacation
getaways are tied to the theme and supported by key sponsors. All theme months
are supported with interactive solutions allowing viewers to access information,
travel programs and contests that are designed to target R&R's two great
passions - "home” and “travel."
 
 The
Network owns original programming including the following television
series:
 
 ·
              The
      Travel Magazine (160 episodes)
 ·
              The
      Golf Show (40 episodes)
 ·
              Extraordinary
      Vacations
 
 The
network will only produce original programming with pre-committed sponsorship
dollars that cover both the cost of production and provide the Company with
dollars to cover the pro-rata retail value of the airtime associated with the
programming.  The full-time network will also become a marketer of the
wholly-owned travel and real estate businesses and will promote the VOD platform
as well as the various specialized web properties.
 
 2.
              R&R
      Interactive television campaigns
 
 Next 1
has been working with advertising and strategic business partners to deliver
interactive marketing campaigns over the cable and satellite platforms. Theses
interactive campaigns offer unique opportunities for consumers, programmers,
marketers and advertisers. An interactive campaign allows a consumer to use
their remote control to simply register, receive information, request a phone
call or even order products. To date the Company has the option of running two
types of campaigns – static or dynamic – as outlined below, however advancements
are being implemented by cable and satellite operators that will greatly expand
the capabilities of interactive television over the next 12 months.
 
 ·
              Static
      Campaigns – Static advertising campaigns offer simple level of user
      interactivity to make an immediate impact on the viewer. These campaigns
      are ideal for a call to action message, one-touch RFI programs for lead
      generation and direct access to long form video assets. In a typical
      static campaign a viewer interest can be captured with cross channel
      advertising driving the viewer to the interactive TV
    campaign.
 
 ·
              Dynamic
      Campaigns – Dynamic advertising campaigns typically offer the advertiser
      their own channel for an agreed upon time period, offering the viewers
      enhanced user interactivity. These campaigns are often designed around
      long form video content. The user experience is further enhanced with a
      micro site that can include multiple pages of content and video promoting
      the advertisers products and services. The dynamic advertising campaign
      elements can include analytics, RFI, video, games, sweepstakes, trivia
      product samples and special offers.
 
 3.
              Home
      TV – A Video-On-Demand solution for Real
Estate
 
 In the
real estate space, the Company acquired Home Preview Channel®(“HPC”) - the first and
only cable real estate listing television network.  The Company,
through the acquisition of HPC recognized the opportunity real estate presented
with multiple streams of revenue, from targeting advertising, sponsorships and
premium listing ads to the opportunity to actually share in the sales commission
from the sale of specific property listing. To take advantage of this, the
Company has secured its real estate broker license and acts as a referral agent
and is therefore entitled to a percentage of the commission earned by the
purchaser’s sales agent.
  6
  The
original HPC model had severe limitations and after the acquisition, the Company
discontinued the traditional real estate model that called for agents to pay for
posting listings in favor of a new nationwide VOD model called Home
TV.
 
 Home TV
is a new channel being launched by the Company in the second quarter. Home TV
will allow prospective home buyers in more than 70 U.S. markets, representing 15
million digital cable homes, to view thousands of in-market real estate listings
on Comcast by selecting channel 888 or by selecting “Searchlight” on the Comcast
On-Demand menu - and then selecting "Real Estate." The Company has secured an
exclusivity relationship with Comcast for residential homes on the On-Demand
platform.
 
 Next 1
believes that VOD is an ideal platform for consumers to shop for homes in their
local market or across the nation as well as vacation properties in destinations
around the world. Interested buyers can use their remotes to browse listings in
a video tour format on their televisions from the comfort of their couch. Then
viewers will have their choice of using - interactive or online applications,
the latest texting techniques or 800 numbers to put the prospective buyers
directly in touch with real estate agents and brokers.  Home TV is
another media platform for Next 1 to generate revenue from interstitial
advertising, sponsorships, referral fees and commissions consistent with our
business model. The real estate industry today seeks brand awareness and the
ability to reach new potential buyers. Comcast Spotlight's Searchlight
advertising platform enables Home TV to provide a valuable service to consumers
and real estate companies.
  The
future media choice for consumers is an On-Demand video world that is available
across multiple platforms - cable/satellite, web, mobile. It is increasingly
clear that video is a key element to engagement with
consumers.  Today, while consumers still watch their “favorite “TV
shows, they are increasingly watched through time shifting or On-Demand. VOD,
with its engaging video, user-controlled experience and 24x7 availability, is an
ideal platform for potential home buyers to get information on specific
properties in the market they seek. Home TV is a natural fit with our strategy
of making advertising more engaging and connecting with consumers by making
relevant, interactive content available when they want to view it. While today
the bandwidth for real estate listings on VOD does not allow for all of the
available multiple listings in the U.S. to be placed on the VOD platform, the
VOD TV viewer can also be taken to the R&R Home TV On-Demand website to see
the national listing database.
  Next 1
will also produce Home video showcases on its full time TV Network R&R TV.
Like Home TV on Demand, R&R Network will generate revenues from advertising
as well as generating leads and customer referrals that it will forward to
licensed realtors interested in receiving leads generated from the
Network
  4.
              RRTV.com
      Website
  The
RRTV.com website is designed to guide users through the television programming
schedule, highlight the weekly featured series and to allow viewers access to
special promotions, travel clubs and contests, sign up for customized
e-newsletters as well as taking advantage of great discounts and special offers
from R&R marketing partners. The web properties, while the least expensive
to launch, also provide the true platform for “community”. In today’s
environment, it is all about hyper-targeting to the customers’ business want and
need to reach.  It is the web properties which engage users with
personalized transactional options that also allows Next 1 to create databases
of specific customers that are of value to marketers connected with the travel
and real estate verticals.  The websites all combine features that
allow for e-commerce, revenue sharing, database development, sponsorships, rich
media and video advertising, internet radio mirroring the TV offerings and
social communities. An integral extension of the broadcast television network,
RRTV.com offers live streaming of the full-time broadcast feed along with
pre-roll video display of advertising messages prior to the viewer watching the
programming, rich media banner advertising, custom micro-site and traditional
banner advertising.
  RRTV.com
will be a destination for the TV viewer to go to after watching the TV programs
and participate in interactive promotions plus take advantage of specials from
featured sponsors that will appear on R&R TV, R&R Radio and the R&R
web platforms.
  7
  ·
              Broadband -we are live
      streaming R&R TV’sfull time
      television network on www.RRTV.com. Consumers are able to watch the
      channel from their home computer, laptop or mobile device no matter where
      they are. Live streaming on the web serves a dual purpose by both
      expanding R&R's viewership reach while at the same time providing
      R&R TV new revenue sources through its advertising and marketing
      partners. Not only do advertisers receive increased exposure for their
      television ads and special offers, but they will also receive additional
      marketing opportunities through pre-roll advertising and linked banner ads
      and contextual display ads surrounding the streaming video player. This
      allows viewers the option to both watch and immediately
      transact.
 
 ·
              Showcases and Affiliate
      Solutions - we have developed several methods to extend our reach
      on behalf of advertisers. For travel-oriented sites with their own content
      and formats, we are able to include our rich media “showcases” which
      feature travel related video devoted exclusively to the content and
      marketing of a specific travel brand.  Advertisers can package
      messages around the relevant showcases.  Some of our clients
      include Royal Caribbean Cruise Lines, Norwegian Cruise Lines, Carnival
      Cruise Lines, the Tourist Board of Spain, Spirit Airlines and
      RCI.   To further maximize our reach for non-travel
      sites that would like to have a travel section, we are deploying a “white
      label” version of the Company’s travel videos, information and services
      which can be easily integrated into these “Affiliate” sites travel
      section.
 
 ·
              R&R RadioNetwork- a unique
      Internet radio network that includes 6 hours of travel-talk shows.
      Launched in May 2010, the channel features programming hosted by travel,
      real estate and home improvement experts. The audience interacts with chat
      and blogs on travel ideas, resort reviews, real estate tips and
      more.  The platform enables web listeners to listen live or play
      programs when desired. R&R Radio is carried by Blog Talk radio and
      reaches over 9 million listeners every month. R&R Radio also produces
      and broadcasts content to terrestrial stations that reaches listeners
      across the United States.
 
 5.
              OnBoard
      TV
 
 Next 1
has won the contract to operate OnBoard TV thereby allow it to control and
insert all advertising messages for the television network that airs on the
major cruise lines. OnBoard TV includes Carnival, Celebrity, Holland America
Cruise Lines, Royal Caribbean Cruise Lines, Chrystal Cruise Lines and Norwegian
Cruise Lines. OnBoard TV is sent by satellite to cruise ships around the globe
giving passengers access to well-established channels like FOX NEWS, CNBC, BBC,
MSNBC, SKY NEWS and SKY SPORTS. OnBoard TV will be viewed by 270,000 unique
active adults every month.
 
 Real
Estate Division:
 
 1.
              Next One Realty,
      Inc.
 
 Next One
Realty was established in March 2010 to allow the Company to execute on its Home
TV on Demand business model. The Company currently holds realtor licenses in
several states and in the process of acquiring mortgage licenses as well.
It is the Company’s plan to expand this to all 50 states over the next 12
months. Additionally the Company has numerous operating and marketing agreements
with both brokers and agents throughout the U.S.
 
 2.
              The
      Home Preview Channel
 
 On
October 29, 2008, the Company consummated the transactions contemplated by a
Purchase Agreement, dated July 15, 2008 with the stockholders of The Home
Preview Channel, Inc. (“HPC”). The Home Preview Channel was a cable television
network with Master Carriage licenses for both Comcast and Time Warner and with
distribution at the time into approximately 1.6 million homes.  The network
had a technology that was developed in conjunction with Loop Networks (see
below) that allowed for consolidation of large amounts of data while utilizing
small amounts of bandwidth. The Company saw in HPC a significant
opportunity to revamp and re-launch the network into a more current format that
could include travel and real estate while utilizing the reach to accelerate Web
and Mobile properties for the company. In addition the Company recognized the
opportunity to use the HPC carrier relationships to expand the platform for both
Linear and Video on Demand opportunities.
  8
 
 3.
              Loop
      Networks, Inc.
 
 On
October 29, 2008, the Registrant consummated the transactions contemplated by a
Purchase Agreement with the members of Loop Networks, LLC (“Loop”). Loop
Networks is a technology company that owns the Detroit HPC charter agreement.
Loop oversaw the development of the HPC operating technology as well as certain
proprietary automated systems that can be used to expand on-demand capabilities
for the Home Preview Channel.  This technological solution was developed
over several years at a cost of over $16 million and allowed for large
quantities of data content (i.e. home listings, information, pictures) to be
ingested into the system and then be moved over the internet to the cable
head-end and be reassembled in TV quality video format, thus providing the
Company with a unique solution for cable television and internet interface. The
technology behind Loop consists of a proprietary content aggregation network and
a five-point content distribution model which consists of Basic TV, VOD,
Broadband, Interactive TV, and Wireless - all designed to facilitate live
end-user feedback. The entire content distribution model was supported by Loop’s
centralized content database.  The source code for the technology was
given to a company named Kuvata to allow for continued development and further
enhance the operating system in exchange for Kuvata granting a perpetual license
to the upgraded solution.
 
 4.
              R&R
      TV
 
 On August
17, 2009, Next 1 Interactive, Inc. (the “Company”) and Televisual Media Works,
LLC (“Televisual Media”) closed on an Asset Purchase Agreement (the “Agreement”)
whereby the Company purchased certain rights, trademarks and other intangible
property of Resort and Residence TV, a wholly owned subsidiary of Televisual
Media, consisting of the following:
 
 1)
              Trade
      name of the company of Resort &
Residence;
 2)
              Trademark
      of Resort & Residence;
 3)
              Domain
      names of “resortandresidence.tv”, resortandresidencechannel.net;
      resortandresidencechannel.tv and
      resortandresidencechannel.info;
 4)
              Licenses
      and permits necessary for the conduct of the business of the
      Company;
 5)
              Interactive
      application design;
 6)
              Network
      promotional video clip.
 
 The
previously listed intangibles, in conjunction with the industry contacts of the
seller, resulted in the execution of a Broadcast Services Agreement (“BSA”) with
a major satellite service provider. The achievement of this relationship in a
timely manner was critical to launching R&R TV.
 
 The
carriage/distribution agreements acquired as a result of the HPC acquisition and
TV Media Works asset acquisition, in conjunction with the licensed technology
acquired in the Loop acquisition make possible the Real Estate Revenue Model of
Next One Realty, Inc., which will be broadcast via the R&R TV network. See
Note 4 to the consolidated financial statements for additional information
regarding acquisitions and intangible assets.
 
 Travel
Division:
 
 1.
              NextTrip.com
 
 NextTrip.com
is an all-purpose travel site that includes user-generated content, relevant
social networking, a directory of travel affiliate links, and travel business
showcases, with an emphasis on video. NextTrip.com provides viewers with a
diverse video experience that entertains, informs, and offers utility and
savings. The travel information website offers users, free of
charge, hundreds of destination videos and promotes worldwide vacation
destinations. NextTrip.com generates revenues through advertising, travel
commission, referral fees, and its Affiliate program. The NextTrip.com travel
fulfillment and services are handled by Mark Travel. Mark Travel is the largest
wholesaler of travel products in the United States.
  9
 
 NextTrip.com,
in conjunction with the R&R TV network allows advertisers such as hotels,
airlines, cruise lines, and tour operators to place banner ads and SHOWCASES on
the Company’s websites for a fee. The website also offers live 24/7 travel talk
radio (R&R Radio), travel articles, destination guides, travel deals and
“Brag and Share Social Network”, where users can post photos and commentary.
NextTrip.com was launched in July of 2008. Operation of the site was taken over
by Mark Travel in February, 2010.  The website is
www.NextTrip.com.
 
 2.
              Maupintour
      Extraordinary Vacations
 
 Maupintour
is a luxury tour operator offering escorted and independent tours worldwide to
upscale travelers. The company has operated for over 50 years and has an active
alumni that desires luxury vacations that includes private sightseeing, fine
dining and 4 and 5 star accommodations. Sizes of the tourist groups range from
10 to 25. The company’s most popular destinations are Egypt, Israel, Europe,
Africa, Asia and Peru.  The company’s peak season for this division is
from February to July. Maupintour’s website is www.Maupintour.com.
 
 3.
              Cruise
      and Vacation Shoppes
 
 Cruise
and Vacation Shoppes (“Cruise Shoppes”) is a Travel Consortia and marketer of
cruises worldwide. The company offers its membership complete marketing
solutions, industry expertise, technology solutions and
higher   commissions then they would receive as an independent
agency.  The Cruise Shoppes website is
www.CruiseShoppes.com.
 
 The
Company assets make it a diversified business focused on two very strong
vertical consumer-passion categories that are also founded on industries that
need to constantly market since they have “perishable” inventory that always
needs to be sold or revenue is lost.  The media assets, while
generating discrete revenue streams are connected to and leveraged to grow the
Company's non-media based travel businesses. This makes for a sound business
which is substantially more marketable through both traditional outlets, earned
media and virally through large groups and individuals - friends tell friends
using the Company’s travel assets to motivate and reward engagement and
sales.
 
 Web
Properties
 
 The
websites and mobile applications are anticipated to quickly drive incremental
revenues based on the promotion and awareness being driven by the TV
platforms.  It is anticipated that these web properties will generate
advertising and referral revenue as a result of the integrated sales packages
offered by the sales team beginning with the third quarter of fiscal 2011. The
primary web properties are:
 
 ·
              www.nxoi.com
 ·
              www.RRTV.com
 ·
              www.nexttrip.com
 ·
              www.hometvondemand.com
 ·
              www.Maupintour.com
 ·
              www.cruiseshoppes.com
  10
 
 Our Principal Products and
Services and Their Markets
 
 We
currently have two operating segments, Media (R&R) and Travel (Maupintour
& Cruise and Vacation Shoppes-EVUSA), with a third segment, Real Estate, to
be launched June of 2010. Since our inception, we have been focused on the
travel industry solely through the Internet. We have changed our current
business model from a company that generates nearly all of its revenues from its
travel divisions to a media company focusing on Interactive Media advertising
platforms utilizing Cable and Satellite Television, the Internet, (including
Radio and Broadband) and Mobile. The most expensive media platforms to roll out
have been the television networks. This includes the full-time R&R
television programming network and the Home TV VOD real estate
network.  These networks are the key platforms that differentiate the
Company giving it significant reach into over 25 million households as a linear
24/7 network and an exclusive nationwide real estate VOD to 15 million
households. In the initial stages the largest source of revenue for the Company
will come from advertising. This revenue will increase as the Company expands
the number of households for the R&R programming network to over 45 million
thereby becoming eligible to be a “Nielsen Rated Network”.
 
 Additionally
the Company believes it will see significant revenue growth with advertisers
with the planned industry enhancements for interactive television. At present
the Company has designed its media platforms to address the advertisers' needs
to provide compelling content and a delivery system in the emerging convergent
landscape of the internet, television and mobile platforms. The network is now
in the position to begin to capture significant advertising revenue from Direct
Response long form advertising (infomercials), short form and general
advertisers. General advertising provides the highest revenue per 30 second
commercial. As the network is new and unrated, the Company has taken steps to
integrate its media platforms in such a way as to allow for the delivery of
measurable return on investment to its advertisers, sponsors and business
partners.
 
 Additionally
the Company has differentiated itself from other media companies through its
ownership and operation of businesses in its verticals - travel and real
estate.  These businesses not only afford the Company multiple
industry relationships and affiliations, but further provide industry licenses
that will allow the Company to capture sales commissions and referral fees from
products advertised and sold through its media platforms. The Company believes
this model gives it a distinct advantage and it will see sponsorships,
transactional commissions and referral fees grow over time to the point where
they will exceed the advertising revenues that are available to traditional TV
networks.
 
 The
Company has also launched an internet radio network called the R&R Radio
Network running on the Blog Talk Radio platform. The R&R Radio Network
features targeted travel shows like the Extraordinary Vacation showand others thatare designed to drive
travel sales. In short, it is a first for vacation shopping on a network.
Additional planned distribution to other satellite and cable networks should
dramatically enhance advertising rates the Company can charge. This expansion
includes the VOD. The Network has been working with cable operators to become
the first nationwide VOD network for real estate and is in discussions to
introduce a travel VOD offering. In addition to growth around its current
business model, the network provides the basis for Next 1 to enter the travel
and real estate vertical ad sales marketplace online. We believe our network has
vast growth potential
 
 The media
assets, while generating distinct advertising revenue streams, also affords the
Company the opportunity to leverage the growth of the non-media based travel
businesses. This makes for a sound business opportunity to significantly improve
the marketing scope of the base travel business through both traditional outlets
and its extensive media reach.
 
 Travel
revenues are generated by Maupintour Extraordinary Vacations, Inc.,
(“Maupintour”), NextTrip.com and Cruise Shoppes. Our current market is primarily
the North American leisure travel industry, though our websites are available in
English worldwide.
 
 Maupintour’s
revenue is generated from the sale of high end escorted tours and Flexible
Independent Travel (FIT) tours. Cruise Shoppes receives revenues from
commissions on direct bookings with cruise lines for affiliate travel agent’s
and the general public.  NextTrip.Com is a travel website with primary
focus centered on vacation packages. The Company currently uses certain of its
media assets like clips from its Travel Magazine TV series to promote travel
destinations on the Nextrip site. We plan to significantly expand the number of
travel clips available on the web to both our properties and other Company
websites by utilizing much of the content that is being broadcast as part of
R&R’s travel destinations programming.
  11
 
 The
Company’s target market is the traditional travel sector, which the Company
continues to operate as mature businesses. These businesses continue to serve
their existing client bases, and include Maupintour Extraordinary Vacations (a
luxury worldwide tour operator) and Cruise Shoppes (a cruise industry consortia
and marketer of cruises) and NextTrip.com (a vacation website). The travel
businesses cater to upscale clientele seeking customized trips. The Company
estimates that its target market represents 5% of all U.S. domestic leisure
travelers. We believe that upscale travelers, primarily discerning Baby Boomers,
seek travel solutions rather than pre-packaged tours, and the Company has made a
consistent business of catering to this niche marketplace, rather than compete
on the lower end of the market which is now dominated by names like Expedia and
Travelocity.
 
 Business
Strategy
 
 Near-Term
Objectives:
 
 Next 1 is
a multi-faceted interactive media company whose key focus is to continue to grow
its media interests around two of the most universal, yet powerful consumer
passions - real estate and travel. The Company delivers targeted content via
digital platforms including Satellite, Cable, Broadcast, Broadband, Web, Print
and Mobile. Its media platforms  include a 24/7 full time lifestyle
programming TV Network called “R&R TV, Inc.” is currently in over 25 million
and the Company would like to expand this to 60 million  households.
The Company is launching an exclusive nationwide real estate VOD channel to 15
million households this quarter called “Home TV on Demand”.
 
 Additionally
the Company has differentiated itself from other media companies through its
ownership and operation of businesses in its verticals - travel and real
estate.  These real estate and travel businesses not only afford the
Company multiple industry relationships and affiliations, but further provide
industry licenses that will allow the Company to capture sales commissions and
referral fees from products advertised and sold through its media platforms.
Next 1 has expended significant capital over the past two years in the creation
of its interactive media platforms and the launching and roll out of its
television networks. The Company is targeting to have all platforms operational
by the third quarter of fiscal 2011.
 
 The key
objective for the Company, once all platforms are operating, is to capture
multiple revenue streams including transactional commissions, referral fees,
advertising and sponsorship.
 
 Long-Term
Objectives:
 
 As we
expand our business model we will become a full-service multi-media advertising
outlet offering television (traditional and VOD), internet display ads, rich
media ads, video ads, radio, and mobile outlets. As we build our television
network, viewership and traffic, our reach and cross-promotion capabilities will
lead to the launching of additional targeted TV networks. Our involvement in
cable TV, web and radio will keep us at the forefront of cross-platform
deal-making as such activity becomes more common among advertisers.
 
 Our
Competitors
 
 Our
primary competitors are companies such as the Travel Channel, Home and Garden
TV, Plum TV, Wealth TV, the Outdoor Channel, and others. These are television
networks that are primarily targeted at specific verticals in the travel, real
estate and lifestyle fields.
 
 In the
travel sector, internet sites such as “Travelocity.com”, “Expedia.com”, and
“Priceline.com” appear focused on their own core functionality - fare searches
and ticket sales.  Therefore, they are more likely to become actual
advertisers on our network then they are to be competitors.  As such,
we see greater potential in providing advertising solutions to drive customers
to “Travel Video Showcases” and to websites, than to compete in the sale of low
margin travel product.
  12
  Intellectual
Property
 
 On August
17, 2009, Next 1 Interactive, Inc. (the “Company”) and Televisual Media Works,
LLC (“Televisual Media”) closed on an Asset Purchase Agreement (the “Agreement”)
whereby the Company purchased certain rights, trademarks and other intangible
property of Resort and Residence TV, a wholly owned subsidiary of Televisual
Media. These assets, in conjunction with the industry contacts of the seller,
resulted in the execution of a Broadcast Services Agreement (“BSA”) with a major
satellite service provider. The achievement of this relationship in a timely
manner was critical to launching R&R TV. The cost of the Resort and
Residence TV asset acquisition was $6.88 million of which a $250,000 deposit has
been paid. See Note 6 to the consolidated financial statements for discussion of
future debt payments.
 
 On
October 29, 2008, the Company consummated the transactions contemplated by a
Purchase Agreement, dated July 15, 2008 with the stockholders of The Home
Preview Channel, Inc. (“HPC”). The Home Preview Channel was a cable television
network with Master Carriage licenses for both Comcast and Time Warner and with
distribution at the time into approximately 1.6 million homes.  The network
had a technology that was developed in conjunction with Loop Networks (see
below) that allowed for consolidation of large amounts of data while utilizing
small amounts of bandwidth. Pursuant to the HPC Agreement, the Company issued
677,999 shares of its common stock in exchange for 100% of the issued and
outstanding shares of HPC. The total value of the consideration given was
approximately $692,000. The Company acquired assets with a net realizable value
of approximately $166,000 and assumed adjusted liabilities of approximately
$824,000 resulting in amortizable intangible assets of approximately $1,350,000.
The assets acquired consist primarily of broadcast services agreements and
developed relationships with cable TV carriers and are being amortized over an
estimated useful life of seven years.
 
 On
October 29, 2008, the Registrant consummated the transactions contemplated by a
Purchase Agreement with the members of Loop Networks, LLC (“Loop”). Loop
Networks is a technology company that owns the Detroit HPC charter agreement.
Loop oversaw the development of the HPC operating technology as well as certain
proprietary automated systems that can be used to expand on-demand capabilities
for the Home Preview Channel. Pursuant to the Loop Agreement, the Company
issued 5,345,000 shares of its common stock in exchange for 100% of the issued
and outstanding membership interests of Loop. The total value of the
consideration given was approximately $5,450,000. The Company acquired assets
with a net realizable value of approximately $5,000 and assumed liabilities of
approximately $300,000 resulting in intangible assets of approximately
$5,650,000. The assets acquired consist primarily of the exclusive use of
technology required to provide video-on-demand and interactive TV capabilities
and are being amortized over an estimated useful life of seven
years.
 
 Costs in
the amount of $515,000 incurred in the development of our website application
and infrastructure were capitalized. Management placed the website into service
during the fiscal year ended February 28, 2010, subject to straight-line
amortization over a three year period.
 
 The
following is a list of the Company’s active domain names:
  Domain Name:
                  
                  Owner:www.nxoi.com
                  
                  Next
      1 Interactive, Inc.www.RRTV.com
                  
                  Next
      1 Interactive, Inc.www.nexttrip.com
                  
                  Next
      1 Interactive, Inc.www.hometvondemand.com
                  
                  Next
      1 Interactive, Inc.www.Maupintour.com
                  
                  Next
      1 Interactive, Inc.www.CruiseShoppes.com
                  
                  Next
      1 Interactive, Inc.
 
 Sources and Availability of
Raw Materials and the Names of Principal Suppliers
 
 Our
products do not require the consumption of raw materials.
 
 Dependence on One or a Few
Customers
 
 We do not
depend on one or a few customers. As we expand our business, we do not
anticipate that we will depend on one or a few customers.
  13
  Government
Regulation
 
 Our
operations are subject to and affected by various government regulations,
U.S. federal, state and local government authorities. The operations of
cable, satellite and telecommunications service providers, or distributors, are
subject to the Communications Act of 1934, as amended, and to regulatory
supervision by the FCC. The license is also subject to periodic renewal and
ongoing regulatory requirements. The rules, regulations, policies and procedures
affecting our businesses are constantly subject to change. These descriptions
are summary in nature and do not purport to describe all present and proposed
laws and regulations affecting our businesses.
 
 Effect
of “Must-Carry” Requirements
 
 The Cable
Act of 1992 imposed “must carry” or “retransmission consent” regulations on
cable systems, requiring them to carry the signals of local broadcast television
stations. Direct broadcast satellite (“DBS”) systems are also subject to their
own must carry rules. The FCC recently adopted an order requiring cable systems,
following the anticipated end of analog television broadcasting in June 2009, to
carry the digital signals of local television stations that have must carry
status and to carry the same signal in analog format, or to carry the signal in
digital format alone, provided that all subscribers have the necessary equipment
to view the broadcast content. The FCC’s implementation of these “must-carry”
obligations requires cable and DBS operators to give broadcasters preferential
access to channel space. This reduces the amount of channel space that is
available for carriage of our network by cable television systems and DBS
operators. Congress and the FCC may, in the future, adopt new laws, regulations
and policies regarding a wide variety of matters which could affect R&R TV.
We are unable to predict the outcome of future federal legislation, regulation
or policies, or the impact of any such laws, regulations or policies on R&R
TV’s operations.
 
 Closed
Captioning and Advertising Restrictions on Children’s
Programming1
 Our
network will provide closed-captioning of programming for the hearing impaired
prior to the three-year compliance requirement. Our programming and Internet
websites intended primarily for children 12 years of age and under must
comply with certain limits on advertising. We are a “family-friendly” network
that provides on-screen notices of programs that may not be appropriate for
children.
  Obscenity
Restrictions
 Cable
operators and other distributors are prohibited from transmitting obscene
programming, and our carriage/distribution agreements generally require us to
refrain from including such programming on our network.
  Regulation
of the Internet
 We
operate several internet websites which we use to distribute information about
and supplement our programs. Internet services are now subject to regulation in
the United States relating to the privacy and security of personally
identifiable user information and acquisition of personal information from
children under 13, including the federal Child Online Protection Act (COPA) and
the federal Controlling the Assault of Non-Solicited Pornography and Marketing
Act (CAN-SPAM). In addition, a majority of states have enacted laws that impose
data security and security breach obligations. Additional federal and state laws
and regulations may be adopted with respect to the Internet or other online
services, covering such issues as user privacy, child safety, data security,
advertising, pricing, content, copyrights and trademarks, access by persons with
disabilities, distribution, taxation and characteristics and quality of
products and services. In addition, to the extent we offer products and services
to online consumers outside the United States, the laws and regulations of
foreign jurisdictions, including, without limitation, consumer protection,
privacy, advertising, data retention, intellectual property, and content
limitations, may impose additional compliance obligations on us.
  Other
Regulations
 In
addition to the regulations applicable to the television industry in general, we
are also subject to various local, state and federal regulations, including,
without limitation, regulations promulgated by federal and state environmental,
health and labor agencies.
  14
 
 Research &
Development
 
 The
Company is not currently engaged in any research and development. The Company is
currently focused on marketing and distributing its current inventory of
products and services.
 
 Employees
 
 The
Company has 25 full-time employees. 19 are located in the headquarter office, 5
are located in various states across the U.S. and 1 in Canada. The headquarters
staff is comprised of 4 sales representatives, 2 administrative support staff, a
web designer, 1 senior management and the chief executive staff.
 
 We lease
our employees through ADP TotalSource. The basic function of an employee leasing
company is to achieve economies of scale through volume purchasing of employee
health benefits and other “big-ticket” items. In addition, this service provided
other HR-related functions thereby eliminating the cost associated with an
in-house HR department.
 
 Item
1A. Risk Factors
 
 In
addition to the other information in this Form 10-K, readers should carefully
consider the following important factors. These factors, among others, in some
cases have affected, and in the future could affect, our financial condition and
results of operations and could cause our future results to differ materially
from those expressed or implied in any forward-looking statements that appear in
this Form 10-K or that we have made or will make elsewhere.
  Risks
Inherent to this Company:
  Because
of losses incurred by us to date and our general financial condition, we
received a going concern qualification in the audit report from our Independent
Registered Public Accounting Firm for the most recent fiscal year that raises
substantial doubt about our ability to continue to operate as a going
concern.
  At
February 28, 2010, we had $211,905 cash on hand. The accompanying consolidated
financial statements have been prepared assuming the Company will continue as a
going concern. As discussed in Note 2 to the consolidated financial statements
included in this Annual Report, the Company had an accumulated deficit of
$29,961,571 and a working capital deficit of $2,137,631 at February 28, 2010,
net losses for the year ended February 28, 2010 of $11,864,232 and cash used in
operations during the year ended February 28, 2010 of $5,594,142. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern.
 
 We
have a limited operating history and we anticipate that we will have operating
losses in the foreseeable future.
  We cannot
assure you that we will ever achieve profitable operations or generate
significant revenues.  Our future operating results depend on many
factors, including demand for our products, the level of competition, and the
ability of our officers to manage our business and growth.  As a
result of our limited operating history and the emerging nature of the market in
which we compete, we anticipate that we will have operating losses until such
time as we can develop a substantial and stable revenue base.
  We
will need additional capital which may not be available on commercially
acceptable terms, if at all.
  We have
very limited financial resources.  We currently have a monthly cash
requirement of approximately $1 million, exclusive of capital expenditures. We
will need to raise substantial additional capital to support the on-going
operation and increased market penetration of R&R TV including the
development of national advertising relationships, increases in operating costs
resulting from additional staff and office space until such time as we generate
revenues sufficient to support itself.  We believe that in the
aggregate, we will need as much as approximately $10 million to $15 million to
support and expand the network reach, repay debt obligations, provide capital
expenditures for additional equipment, payment obligations under charter
affiliation agreements, office space and systems for managing the business, and
cover other operating costs until our planned revenue streams from media
advertising and e-commerce, travel and real estate are fully-implemented and
begin to offset our operating costs.   Our failure to obtain
additional capital to finance our working capital needs on acceptable terms, or
at all, will negatively impact our business, financial condition and
liquidity.  In addition, as of February 28, 2010 we had $5 million of
current liabilities.  We currently do not have the resources to
satisfy these obligations, and our inability to do so could have a material
adverse effect on our business and ability to continue as a going
concern.
  15
  If
we continue to experience liquidity issues and are unable to generate revenue,
we may be unable to repay our outstanding debt when due and may be forced to
seek protection under the federal bankruptcy laws.
  We have
experienced liquidity issues since our inception due to, among other reasons,
our limited ability to raise adequate capital on acceptable terms.  We
have historically relied upon the issuance of promissory notes that are
convertible into shares of our common stock to fund our operations and currently
anticipate that we will need to continue to issue promissory notes to fund our
operations and repay our outstanding debt for the foreseeable
future.  At February 28, 2010, we had $2.9 million of current debt
outstanding and $6.5 million of long-term debt
outstanding.    If we are unable to achieve operational
profitability or not successful in issuing additional promissory notes or
securing other forms of financing, we will have to evaluate alternative actions
to reduce our operating expenses and conserve cash.
  Moreover,
as a result of our liquidity issues, we have experienced delays in the repayment
of promissory notes upon maturity and the payment of trade receivables to
vendors and others when due.  Our failure to pay vendors and others
may continue to result in litigation, as well as interest and late charges,
which will increase our cost of operations.  If in the future, holders
of promissory notes demand repayment of principal and accrued interest instead
of electing to convert to common stock and we are unable to repay our debt when
due or resolve issues with existing promissory note holders, we may be forced to
refinance these notes on terms less favorable to us than the existing
notes.
  Our
business revenue generation model is unproven and could fail.
  Our
revenue model is new and evolving, and we cannot be certain that it will be
successful. The potential profitability of this business model is unproven and
there can be no assurance that we can achieve profitable operations. Our ability
to generate revenues depends, among other things, on our ability to operate our
television network and create enough viewership to provide advertisers,
sponsors, travelers and home buyers value. Accordingly, we cannot assure you
that our business model will be successful or that we can sustain revenue
growth, or achieve or sustain profitability.
  Our
success is dependent upon our senior management team and our ability to hire and
retain qualified employees.
  We
believe that our success is substantially dependent upon: (1) our ability to
retain and motivate our senior management team and other key employees; and (2)
our ability to identify, attract, hire, train, retain and motivate other
qualified personnel.  The development of our business and operations
is dependent upon the efforts and talents of our executive officers, whose
extensive experience and contacts within the industries in which we wish to
compete are a critical component of our business strategy.  We cannot
assure you that we will be successful in retaining the services of any of the
members of our senior management team or other key personnel, or in hiring
qualified technical, managerial, marketing and administrative
personnel.  We do not have "key person" life insurance policies on any
of our key personnel.  If we do not succeed in retaining our employees
and in attracting new employees, our business could suffer
significantly.
  We
may be unable to implement our business and growth strategy.
  Our
growth strategy and ability to generate revenues and profits is dependent upon
our ability to:  (1) develop and provide new services and products;
(2) establish and maintain sales and distribution channels, including the
on-going operation and expansion of our television network; (3) develop new
business opportunities; (4) maintain our existing clients and continue to
develop the organization and systems to support these clients; (5) establish
financial and management systems; (6) attract, retain and hire highly skilled
management and consultants; (7) obtain adequate financing on acceptable terms to
fund our growth strategy; (8) develop and expand our client and customer bases;
and (9) negotiate agreements on terms that will permit us to generate adequate
profit margins.  Our failure with respect to any or all of these
factors could impair our ability to successfully implement our growth strategy,
which could have a material adverse effect on our results of operations and
financial condition.
  16
  We
intend to launch new products in a volatile market and we may be
unsuccessful.
 
 Weintend
to launch new products, which include a television network featuring a vacation
shopping program and VOD for real estate and travel related
products.  The media, travel and real estate sectors are volatile
marketplaces and we may not be able to successfully penetrate and develop all or
either of them.  We cannot assure you that we will be able to maintain
the airwave space necessary to carry a new television network.  We
will be successful only if consumers establish a loyalty to our network and
purchase the products and services advertised on the network.  We will
have no control over consumer reaction to our network or product
offerings.  If we are not successful in building a strong and loyal
consumer following, we may not be able to generate sufficient revenues to
achieve profitability.
  We
do not have the ability to control the volatility of sales.
  Our
business is dependent on selling our products in a volatile consumer-oriented
marketplace.  The retail consumer industry, by its nature, is very
volatile and sensitive to numerous economic factors, including competition,
market conditions and general economic conditions.  None of these
conditions are within our control.  There can be no assurance that we
will have stable or growing sales of our products and advertising space on our
television network, and maintain profitability in the volatile consumer
marketplace.
  We
may not be able to purchase and/or license assets that are critical to our
business.
  We intend
to purchase and/or license archived video and travel collection libraries to
fulfill the programming needs of the Network.  The acquisition or
licensure of these assets is critical to accomplishing our business
plan.  We cannot assure you that we will be successful in obtaining
these assets or that if we do acquire them, that we will be able to do so at a
reasonable cost.  Our failure to purchase and/or license these
libraries at a reasonable cost would have a material adverse effect on our
business, results of operations and financial condition.
  We enter
into carriage/distribution agreements with companies that will broadcast
R&RTV. If we do not maintain good working relationships with these
companies, or perform as required under these agreements, it could adversely
affect our business.
  The
carriage/distribution agreements establish complex relationships between these
companies and us. We intend to spend a significant amount of time, effort and
cost to maintain our relationships with these companies and address the issues
that from time to time may arise from these complex
relationships.  These companies could decide not to renew their
agreements at the end of their respective terms. Additionally, if we do not
perform as required under these agreements or if we breach these agreements,
these companies could seek to terminate their agreements prior to the end of
their respective terms or seek damages from us. Loss of these existing
carriage/distribution agreements would adversely affect our ability to continue
to operate our network as well as our ability to fully implement our business
plan.
  Additionally,
the companies that we have carriage/distribution agreements with are subject to
FCC jurisdiction under the Communications Act of 1934, as
amended.  FCC rules, among other things, govern the term, renewal and
transfer of radio and television broadcasting licenses and limit concentrations
of broadcasting control inconsistent with the public interest.  If
these companies do not maintain their radio and television broadcasting
licenses, our business could be substantially harmed.
  Our
failure to develop advertising revenues could adversely impact our
business.
  Initially,
we intend to generate a significant portion of our revenue from our full-time
television programming network, R&RTV, through sales of advertising time,
television commerce of travel packages and sponsorships of programming enhanced
by interactive applications.  We may not be able to obtain long-term
commitments from advertisers and sponsors or fully deploy the strategy of
interactive applications due to the start-up nature of our
business.  Advertisers generally may cancel, reduce or postpone orders
without penalty.  Cancellations, reductions or delays in purchases of
advertising could occur as a result of a strike, or a general economic downturn
in one or more industries or in one or more geographic areas.  If we
are unable to generate significant revenue from advertising, it will have a
material adverse effect on our business, financial condition and results of
operations.
  17
  We
may not be able to maintain our client relationships that we have
developed.
  Our
clients are, and will be, comprised primarily of travel agencies, cruise lines,
real estate agents and brokers, and national consumer lifestyle product
advertisers.  This clientele is fragmented and requires a great deal
of servicing to maintain strong relationships.  Our ability to
maintain client loyalty will be dependent upon our ability to successfully
market and distribute their products.  We cannot assure you that we
will be successful in maintaining relationships with our artists.  Our
inability to maintain these relationships could have a material adverse effect
on our business, results of operations and financial condition.
  We
may encounter intense competition from substantially larger and better financed
companies.
  Our
success will depend upon our ability to continue to penetrate the consumer
market for media-oriented products and establish a television network with
sufficient ratings to cover the costs associated with operating the network and
provide a return to our investors.  Our Television Network, Travel
Company and Real Estate business will compete with more established entities
with greater financial resources, longer operating histories and more
recognition in the market place than we do.  It is also possible that
previously unidentified competitors may enter the market place and decrease our
chance of acquiring the requisite market share.  Our future success
will depend upon our continued ability to penetrate the market quickly and
efficiently.  Our ability to respond to competitive product offerings
and the evolving demands of the marketplace will play a key role in our
success.  Our failure to develop, maintain and continually improve our
distribution process could prevent us from attaining and maintaining sufficient
market share.  If we are unable to respond and compete in these
markets, it will have a material adverse effect on our business, results of
operations and financial condition.
  Certain legal proceedings and
regulatory matters could adversely impact our results of
operations.
  We are
involved in certain legal proceedings and are subject from time to time to
various claims involving alleged breach of contract claims, intellectual
property and other related claims employment issues, vendor matters and other
litigations. Certain of these lawsuits and claims, if decided adversely to us or
settled by us, could result in material liability to the Company or have a
negative impact on the Company’s reputation or relations with its employees,
customers, licensees or other third parties. In addition, regardless of the
outcome of any litigation or regulatory proceedings, such proceedings could
result in substantial costs and may require that the Company devotes substantial
time and resources to defend itself. Further, changes in governmental
regulations both in the U.S. and in other countries where we conduct
business operations could have an adverse impact on our results of operations.
See Item 3 — “Legal
Proceedings”for further discussion of the Company’s legal
matters.
 
 We
may not be able to adequately manage future growth.
  If we are
successful in implementing our business plan to maturity, the anticipated future
growth of the business could place a significant strain on our managerial,
operational and financial resources. We cannot assure you that management would
effectively manage significant growth in our business.  If we are
successful in executing our business plan and achieve our anticipated growth,
such success will place significant demands on our management, as well as on our
administrative, operational and financial resources.  For us to manage
our growth and satisfy the greater financial disclosure and internal control
requirements that arise with exiting the development stage and becoming fully
operational, we must:
  ·
              upgrade our operational,
      financial, accounting and management information systems, which would
      include the purchase of new accounting and human resources
      software;
 
 ·
              identify and hire an adequate
      number of operating, accounting and administrative personnel and other
      qualified employees;
  18
  ·
              manage new employees and
      integrate them into our
culture;
 
 ·
              incorporate effectively the
      components of any businesses or assets that we may acquire in our effort
      to achieve or support
growth;
 
 ·
              closely monitor the actions of
      our broadcast entities and manage the contractual relationships we have
      with them; and
 
 ·
              develop and improve financial and
      disclosure processes to satisfy the reporting requirements of the SEC,
      including Section 404 of the Sarbanes-Oxley Act of 2002, and the National
      Association of Securities Dealers,
Inc.
  The
failure to adequately manage any growth would adversely affect our business
operations and financial results.
  Mr.
Kerby owns approximately 61% of our voting securities which gives him control of
our Company.
 
 Mr. Kerby
also owns 2,927,503 shares of common stock and 583,243 shares of Series A
Preferred Stock each having the voting equivalency of 100 votes per Series A
preferred Stock.  This gives him voting rights equivalent to
61,251,803 shares of common stock, representing approximately 61% of the total
votes.  Such control by Mr. Kerby of our voting securities gives him
control of electing our directors and appointing management and can delay or
prevent possible mergers or deals and suppress the market value of our common
stock.
 
 We
may be unable to adequately react to market changes.
  Our
success is partially dependent upon our ability to develop our market and change
our business model as may be necessary to react to changing market
conditions.  Our ability to modify or change our business model to fit
the needs of a changing market place is critical to our success, and our
inability to do so could have a material adverse effect on our business,
liquidity and financial condition.
  There
are potential conflicts of interests and agreements that are not subject to
arm’s length negotiations.
  There may
be conflicts of interest between our management and our non-management
stockholders.
  Conflicts
of interest create the risk that management may have an incentive to act
adversely to the interests of other investors. A conflict of interest may arise
between our management’s personal pecuniary interest and its fiduciary duty to
our stockholders. Further, our management’s own pecuniary interest may at
some point compromise its fiduciary duty to our stockholders. In addition, our
officers and directors are currently involved with other blank check companies
and conflicts in the pursuit of business combinations with such other blank
check companies with which they and other members of our management are, and may
in the future be affiliated with, may arise. If we and the other blank check
companies that our officers and directors are affiliated with desire to
take advantage of the same opportunity, then those officers and directors
that are affiliated with both companies would abstain from voting upon the
opportunity. In the event of identical officers and directors, the officers and
directors will arbitrarily determine the Registrant that will be entitled to
proceed with the proposed transaction.
  Risks Related to Investment
in Our Securities
  There
is not presently an active market for shares of our common stock, and therefore,
you may be unable to sell any shares of common stock in the event that you need
a source of liquidity.
  Although
our common stock is quoted on the Over-The-Counter Bulletin Board, the trading
market in our common stock has substantially less liquidity than the trading in
stock on other markets or stock of other companies quoted on the
Over-The-Counter Bulletin Board.  A public trading market in our
common stock having the desired characteristics of depth, liquidity and
orderliness depends on the presence in the market of willing buyers and sellers
of our common stock at any time.  This presence depends on the
individual decisions of investors and general economic and market conditions
over which we have no control.  In the event an active market does not
develop, you may be unable to sell your shares of common stock at or above the
price you paid for them or at any price.
  19
  Existing
stockholders may suffer substantial dilution with future issuances of our common
stock.
  We
anticipate issuing a substantial amount of common stock within the next several
years, either in connection with our equity incentive plan for directors,
officers, key employees and consultants, or in private or public offerings to
meet our working capital requirements.  In addition, we have
convertible debt and approximately 11,700,000 outstanding warrants. Also, there
are currently 663,243 shares of the Company’s Series A Preferred Stock which are
convertible into shares of common stock at a rate of 2:1. Any grants or sales of
additional shares of our common stock, or exercise of our convertible
instruments will have a dilutive effect on the existing stockholders, which
could adversely affect the value of our common stock.
  Our
management, through its significant ownership of our common stock, has
substantial control over our operations.
  Our
management owns a significant portion of the total outstanding shares of our
common stock.  These officers and employees have been and will
continue to be able to significantly influence all matters requiring approval by
our stockholders, including the election of directors and the approval of
mergers or other business combination transactions.
  We
have never paid dividends and do not anticipate paying any in the foreseeable
future.
  We have
never declared or paid a cash dividend and we do not expect to have any cash
with which to pay cash dividends in the foreseeable future.  If we do
have available cash, we intend to use it to grow our business.
  Our
incorporation documents and Nevada lawmay inhibit a takeover
that stockholders consider favorable and could also limit the market price of
your shares of common stock, which may inhibit an attempt by our stockholders to
change our direction or management.
  Nevada
law and our certificate of incorporation contain provisions that could delay or
prevent a change in control of our company.  Some of these provisions
include the following:
  (a)
              authorize our board of directors
      to determine the rights, preferences, privileges and restrictions granted
      to, or imposed upon, the preferred stock and to fix the number of shares
      constituting any series and the designation of such series without further
      action by our stockholders;
and
 
 (b)
              prohibit cumulative voting in the
      election of directors, which would otherwise allow less than a majority of
      stockholders to elect director
  candidates.
  These and
other provisions in our amended and restated certificate of incorporation and
under Nevada law could reduce the price that investors might be willing to pay
for shares of our common stock in the future and result in the market price
being lower than it would be without these provisions.
  We
adopted provisions in our amended and restated certificate of incorporation
limiting the liability of management to stockholders.
  We have
adopted provisions, and will maintain provisions, to our amended and restated
certificate of incorporation that limit the liability of our directors, and
provide for indemnification by us of our directors and officers to the fullest
extent permitted by Nevada law.  Our amended and restated certificate
of incorporation and Nevada law provides that directors have no personal
liability to third parties for monetary damages for actions taken as a director,
except for breach of duty of loyalty, acts or omissions not in good faith
involving intentional misconduct or knowing violation of law, unlawful payment
of dividends or unlawful stock repurchases, or transactions from which the
director derived improper personal benefit.  Such provisions limit the
stockholders’ ability to hold directors liable for breaches of fiduciary duty
and reduce the likelihood of derivative litigation against directors and
officers.
  20
 
 We
are subject to the penny stock rules, which may adversely affect trading in our
common stock.
  Currently
our common stock is a “low-priced” security under the “penny stock” rules
promulgated under the Securities Exchange Act of 1934, as amended. In accordance
with these rules, broker-dealers participating in transactions in low-priced
securities must first deliver a risk disclosure document that describes the
risks associated with such stocks, the broker-dealers’ duties in selling the
stock, the customer's rights and remedies and certain market and other
information. Furthermore, the broker-dealer must make a suitability
determination approving the customer for low-priced stock transactions based on
the customer's financial situation, investment experience and objectives.
Broker-dealers must also disclose these restrictions in writing to the customer,
obtain specific written consent from the customer, and provide monthly account
statements to the customer. The effect of these restrictions will probably
decrease the willingness of broker-dealers to make a market in our common stock,
decrease liquidity of our common stock and increase transaction costs for sales
and purchases of our common stock as compared to other securities. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
abuses normally associated with “low-priced” securities from being established
with respect to our securities.
  Item
1B.  Unresolved Staff Comments
 
 Not
applicable.
 
 Item
2.  Properties
 
 The
Company leases approximately 4,740 square feet of office space in Weston,
Florida pursuant to a lease agreement, with WBP One Limited Partnership, Suite
105 of the building commonly known as Beacon Pointe I located at 2400 North
Commerce Parkway, Weston, Florida 33326. In accordance with the terms of the
lease agreement, the Company is renting the commercial office space, for a term
of four years commencing December 31, 2006 through December 31, 2010. The rent
for the year ending February 28, 2010 was $163,624.
 
 The
Company owns no real property.
 
 Item
3.  Legal Proceedings
 
 On
November 17, 2009, an action was filed for breach of contract by a service
provider to a wholly-owned subsidiary (Brands on Demand, LLC) of the Company
which has since been dissolved. A Motion to Dismiss was filed, after which the
Company agreed to participate in the mediation program offered by the United
States District Court for the District of Columbia. On April 10, 2010, a
settlement was reached whereby the Company agreed to a settlement amount of
$65,000 consisting of a cash payment of $25,000 and $40,000 worth of the
Company’s common stock which equals approximately 70,000 shares.
 
 There is
currently a case pending whereby the Company’s Chief Executive Officer
(“defendant”) is being sued for allegedly breaching a contract which he signed
in his role as CEO of Extraordinary Vacations Group, Inc. The case is being
strongly contested. The defendant’s motion to dismiss plaintiff’s amended
complaint with prejudice has been argued before the judge in the case. We are
awaiting a ruling at this time.
 
 Other
than the litigation matters listed above, we are currently not involved in any
litigation that we believe could have a materially adverse effect on our
financial condition or results of operations. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the executive officers of our company or any of our subsidiaries,
threatened against or affecting our company, our common stock, any of our
subsidiaries or of our company’s or our company’s subsidiaries’ officers or
directors in their capacities as such, in which an adverse decision could have a
material adverse effect.
 
 Item
4.  (Removed and Reserved).
  21


PART
II





Item
5.  Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities





Common
Stock





Our
Certificate of Incorporation authorizes the issuance of 200,000,000 shares of
Common Stock, par value $0.00001 per share. As of the date of this Annual
Report, there are 33,305,626 shares of common stock issued and
outstanding.





Limited
and Sporadic Public Market for Common Stock





Our
common stock currently trades on the Over the Counter Bulletin Board under the
ticker symbol “NXOI.OB.” Our fiscal year end is February 28.  The
following table sets forth the high and low trade information for our common
stock for each quarter since we completed the Reverse Merger and began trading
on July 11, 2006. The prices reflect inter-dealer quotations, do not include
retail mark-ups, markdowns or commissions and do not necessarily reflect actual
transactions.




Period
                    
                    Low Price
                    
                    
                    High PriceQuarter
      ended November 30, 2008
                    
                    $
                    1.02
                    
                    
                    $
                    1.02Quarter
      ended February 28, 2009
                    
                    $
                    1.02
                    
                    
                    $
                    3.00Quarter
      ended May 31, 2009
                    
                    $
                    1.15
                    
                    
                    $
                    3.10Quarter  ended
      August 31, 2009
                    
                    $
                    1.46
                    
                    
                    $
                    2.25Quarter
      ended November 30, 2009
                    
                    $
                    0.95
                    
                    
                    $
                    2.07Quarter
      ended February 28, 2010
                    
                    $
                    0.56
                    
                    
                    $
                    1.06





Preferred
Stock




The
aggregate number of shares of Preferred Stock that the Corporation will have
authority to issue is One Hundred Million (100,000,000), with a par value of
$0.00001 per share.




The
Preferred Stock may be divided into and issued in series. The Board of Directors
of the Corporation is authorized to divide the authorized shares of Preferred
Stock into one or more series, each of which shall be so designated as to
distinguish the shares thereof from the shares of all other series and classes.
The Board of Directors of the Corporation is authorized, within any limitations
prescribed by law and this Article, to fix and determine the designations,
rights, qualifications, preferences, limitations and terms of the shares of any
series of Preferred Stock.





Series
A Preferred Stock





On
October 14, 2008, we filed a Certificate of Designations with the Secretary of
State of the state of Nevada therein establishing our “blank check” Preferred
Stock, a designation as Series A 10% Cumulative Convertible Preferred Stock
consisting of 3,000,000 shares (the “Series A Preferred Stock”). The holders of
record of shares of Series A Preferred Stock shall be entitled to vote on all
matters submitted to a vote of the shareholders of  the Corporation
and shall be entitled to one hundred (100) votes for each share of Series A
Preferred Stock. Preferred stockholders may elect to convert all or any part of
such holder’s shares of Series A Preferred Stock into Common Stock at a
conversion rate of the lower of (a) $0.50 per share or (b) at the lowest price
the Company has issued stock as part of a financing after January 1, 2006 up to
the date of such conversion. In the event of any liquidation, dissolution or
winding up of this Corporation, either voluntary or involuntary (any of the
foregoing, a “liquidation”), holders of Series A Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of this Corporation to the holders of the Common Stock or any other
series of Preferred Stock by reason of their ownership thereof an amount per
share equal to $1.00 for each share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) of Series A Preferred Stock
held by each such holder, plus the amount of accrued and unpaid dividends
thereon (whether or not declared) from the beginning of the dividend period in
which the liquidation occurred to the date of liquidation.


22


On
October 14, 2008, we issued an aggregate of 504,763 shares of Series A Preferred
Stock to William Kerby, the Company’s Chief Executive Officer, in recognition of
outstanding loans, personal assets pledged and personal guarantees provided by
the executive, all deemed essential in allowing the Company to continue
operating. On May 10, 2010, an additional 78,480 shares of Series A Preferred
Stock was issued to Mr. Kerby as settlement for accrued dividends. Mr. Kerby
also owns 2,927,503 shares of common stock, which, together with his Series A
Preferred Stock, gives him voting rights equivalent to 61,251,803 shares of
common stock, representing approximately 61% of the total votes.





Series
B Preferred Stock





The
Company has authorized 3,000,000 shares of Series B 10% Cumulative Convertible
Preferred Stock consisting of 3,000,000 shares (the “Series B Preferred Stock”).
The holders of record of shares of Series B Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the shareholders of  the
Corporation and shall be entitled to one hundred (400) votes for each share of
Series B Preferred Stock. Preferred stockholders may elect to convert all or any
part of such holder’s shares into Common Stock at a conversion formula of the
greater of (i.e. whichever formula yields the greater number of shares of Common
Stock upon conversion): (1) twelve and one-half (12.5) shares of Common Stock
for each share of Series B Preferred Stock converted  or (2) the
number of shares of Series B Preferred Stock being converted multiplied by a
fraction, the numerator of which is $1.00 and the denominator of which is 80% of
the lower of (a) the lowest price at which the Company issued a share of Common
Stock on or after January 1, 2006 up to the date of such conversion or (b) the
lowest market price of a share of Common Stock up to the date of such
conversion.





In the
event of any liquidation, dissolution or winding up of this Corporation, either
voluntary or involuntary (any of the foregoing, a “liquidation”), holders of
Series B Preferred Stock shall be entitled to receive, prior and in preference
to any distribution of any of the assets of this Corporation to the holders of
the Common Stock or any other series of Preferred Stock by reason of their
ownership thereof an amount per share equal to $1.00 for each share (as adjusted
for any stock dividends, combinations or splits with respect to such shares) of
Series B Preferred Stock held by each such holder, plus the amount of accrued
and unpaid dividends thereon (whether or not declared) from the beginning of the
dividend period in which the liquidation occurred to the date of
liquidation.





There
were no Series B Preferred shares issued and outstanding at February 28,
2010.





Series
C Preferred Stock





The
Company has authorized 1,750,000 shares of Series C Senior Preferred Stock
(“Series C Preferred Stock”). Each share of Series C Preferred Stock is
convertible into one hundred (100) shares of the Company’s Common Stock. Holders
of the Series C Preferred Stock shall be entitled to NO votes for each
share of Series C Preferred Stock held.





There
were no Series C Preferred shares issued and outstanding at February 28,
2010.





Options,
Warrants and Convertible Securities





As of
June 8, 2010, there are no issued and outstanding options. We have approximately
11,700,000 outstanding warrants. We also have convertible debt outstanding in
the amount of $300,000, convertible in to units of one common share and one or
two warrants for each $1 of debt. There are currently 663,243 shares of the
Company’s Series A Preferred Stock which are convertible into shares of common
stock at a rate of 2:1. 583,243 shares were issued to the Company’s Chief
Executive Officer as protection for his loans; personal assets pledged on behalf
of the company, personal guarantees, deferred compensation and settlement of
accumulated dividends. 80,000 shares were issued to the Company’s Chief
Operating Officer as settlement for deferred compensation and settlement of
accumulated dividends.


23


Penny
Stock Rules





The term
“penny stock” generally refers to low-priced (below $5.00), speculative
securities of very small companies. While penny stocks generally are quoted
over-the-counter, such as on the OTC Bulletin Board or in the Pink Sheets, they
may also trade on securities exchanges, including foreign securities exchanges.
In addition, penny stocks include the securities of certain private companies
with no active trading market. Before a broker-dealer can sell a penny stock,
SEC rules require the firm to first approve the customer for the transaction and
receive from the customer a written agreement to the transaction. The firm must
furnish the customer a document describing the risks of investing in penny
stocks. The firm must tell the customer the current market quotation, if any,
for the penny stock and the compensation the firm and its broker will receive
for the trade. Finally, the firm must send monthly account statements showing
the market value of each penny stock held in the customer’s account. Penny
stocks may trade infrequently, which means that it may be difficult to sell
penny stock shares once you own them. Because it may be difficult to find
quotations for certain penny stocks, they may be impossible to accurately price.
Investors in penny stocks
should be prepared for the possibility that they may lose their whole
investment.





Dividend
Policy





The
Series A Preferred Stock is entitled to receive cash dividends out of any assets
legally available therefore, prior and in preference to any declaration or
payment of any dividend on any other class of Preferred Stock or Common Stock at
an annual rate of 10% of the $1.00 liquidation value preference per share. Such
dividends shall be cumulative and shall be payable on the first day of April,
July, October and January. To date, we have not paid any dividends and all the
dividends payable on the Series A Preferred Stock was converted to additional
shares of Series A Preferred Stock.





We
currently intend to retain all future earnings for use in the operation and
expansion of our business and do not anticipate paying any cash dividends on
common stock in the foreseeable future. Any future dividends will be at the
discretion of the board of directors, after taking into account various factors,
including among others, operations, current and anticipated cash needs and
expansion plans, the income tax laws then in effect, the requirements of Nevada
law, and any restrictions that may be imposed by our future credit
arrangements.




Transfer
Agent





American
Stock Transfer & Trust Company, LLC


59 Maiden
Lane


Plaza
Level


New York,
NY 10038





Holders
of Our Common Stock





As of
June 7, 2010, we had approximately 477 holders of record of our common stock,
and 2 holders of our preferred stock.





Item
6.  Selected Financial Data





Not
applicable.


24


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





THE
FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION SHOULD BE READ IN CONJUNCTION WITH
THE FINANCIAL STATEMENTS AND RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED
ELSEWHERE IN THIS ANNUAL REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING
STATEMENTS THAT RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE.
THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR
ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF
ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE
FORWARD-LOOKING STATEMENTS. THESE RISKS AND OTHER FACTORS INCLUDE, AMONG OTHERS,
THOSE LISTED UNDER “FORWARD-LOOKING STATEMENTS” AND “RISK FACTORS” AND THOSE
INCLUDED ELSEWHERE IN THIS ANNUAL REPORT.





Forward
Looking Statements





Some of
the information in this section contains forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by
forward-looking words such as "may," "will," "expect," "anticipate," "believe,"
"estimate" and "continue," or similar words. You should read statements that
contain these words carefully because they:




·
            discuss
      our future expectations;





·
            contain
      projections of our future results of operations or of our financial
      condition; and





·
            state
      other “forward-looking”
information.





We
believe it is important to communicate our expectations. However, there may be
events in the future that we are not able to accurately predict or over which we
have no control. Our actual results and the timing of certain events could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth under "Risk Factors,"
"Business" and elsewhere in this Annual Report. See "Risk Factors."





Unless
stated otherwise, the words “we,” “us,” “our,” “the Company,” “Next 1
Interactive, Inc.,” or “Next 1” in this Annual Report collectively refers to the
Company.





Organizational
History





Our
predecessor, Maximus Exploration Corporation was incorporated in the state of
Nevada on December 29, 2005 and was a reporting shell company (“Maximus”).
Extraordinary Vacations Group, Inc. was incorporated in the state of Nevada
June 2004, and its wholly-owned subsidiary Extraordinary Vacations USA Inc. is a
Delaware corporation, incorporated on June 24, 2002 and has been operating since
such date. On October 9, 2008, Extraordinary Vacations Group, Inc. agreed to
sell 100% of Extraordinary Vacations USA to Maximus which consummated a reverse
merger with Maximus, and Maximus changed its name to Next 1 Interactive,
Inc.





Next 1
Interactive, Inc. conducts all of its business through its wholly-owned
subsidiary, Extraordinary Vacations USA, Inc., a Delaware corporation (EVUSA).
EVUSA was formed in June 2004 under the predecessor name Cruise and Vacation
Shoppes, Inc., a consortium of leisure-oriented travel agencies. In December
2005, EVUSA acquired certain assets of Maupintour, LLC an upscale tour operator
specializing in luxury escorted and “fully inclusive” independent tours
worldwide. On March 1, 2007, the Company sold Maupintour LLC to an unrelated
third party.  In October 2007, the purchaser notified EXVG that it was
unable to raise the capital required for the ongoing operations of Maupintour
LLC and exercised it right under the purchase agreement to turn back Maupintour
LLC to EXVG.  As a part of the wind down of Maupintour LLC, EXVG
formed Maupintour Extraordinary Vacations, Inc., (“Maupintour”) on December
14, 2007.  Combining the email databases of these acquisitions, the
Company has an opt-in email list of over 6 million travelers.





Pursuant
to a Stock Purchase Agreement, dated September 24, 2008, between Andriv
Volianuk, a 90.7% stockholder of Maximus; Extraordinary Vacation Group, Inc., a
Nevada corporation (“EXVG”); and EVUSA, a Delaware corporation and a
wholly-owned subsidiary of EXVG, Mr. Volianuk sold his 5,000,000 shares of
Maximus common stock, representing 100% of his shares, to EXVG for an aggregate
purchase price of $200,000. After the sale, Mr. Volianuk did not own any shares
of Maximus. EXVG then reissued the 5,000,000 Maximus shares with the
management of EXVG in exchange for the cancellation of their preferred and
common stock of EXVG under the same terms and conditions as that offered
to EXVG shareholders.


25


On
October 9, 2008, EXVG acquired Maximus, a reporting shell company, pursuant to a
Share Exchange Agreement (the “Exchange Agreement”) between Maximus, EXVG and
EXVUSA.





Pursuant
to this Exchange Agreement, EXVG exchanged 100% of its shares in EVUSA (the
“EVUSA Shares”) for 13 million shares of common stock of Maximus (the “Share
Exchange”), resulting in EXVG becoming the majority shareholder of Maximus. EXVG
then proceeded to distribute the 13 million shares of Maximus common stock to
the stockholders of EXVG (“EXVG Stockholders”), on a pro rata basis. As a result
of these transactions, EVUSA became a wholly-owned subsidiary of Maximus.
Maximus then amended its Certificate of Incorporation to change its name to Next
1 Interactive, Inc. and to authorize 200,000,000 shares of common stock, par
value $0.00001 per share, and 100,000,000 shares of preferred stock, par value
$0.00001 per share. Such transactions are hereinafter referred to as the
“Acquisition.”





The
purpose of the Acquisition was so that Next 1 Interactive, Inc. would become a
fully reporting company with the Securities and Exchange Commission and have our
stock quoted on the OTC Bulletin Board.





As a
result of the Acquisition, there were 18,511,500 shares of common stock of Next
1 Interactive, Inc. issued and outstanding, of which 13,000,000 were held by the
former stockholders of EXVG and 5,000,000 were held by the management of Next 1
Interactive, Inc. and 511,500 shares by the Company’s investors. Of the
13,000,000 shares held by the former stockholders of EXVG, 5,646,765shares were
held by the current executive officers and directors of Next 1 Interactive,
Inc.




Recent
Acquisitions





Resort and Residence
TV





On August
17, 2009, Next 1 Interactive, Inc. (the “Company”) and Televisual Media Works,
LLC (“Televisual Media”) closed on an Asset Purchase Agreement (the “Agreement”)
whereby the Company purchased certain rights, trademarks and other intangible
property of Resort and Residence TV, a wholly owned subsidiary of Televisual
Media, consisting of the following:





1)
            Trade
      name of the company of Resort &
Residence;


2)
            Trademark
      of Resort & Residence;


3)
            Domain
      names of “resortandresidence.tv”, resortandresidencechannel.net;
      resortandresidencechannel.tv and
      resortandresidencechannel.info;


4)
            Licenses
      and permits necessary for the conduct of the business of the
      Company;


5)
            Interactive
      application design;


6)
            Network
      promotional video clip.





The
previously listed intangibles, in conjunction with the industry contacts of the
seller, resulted in the execution of a Broadcast Services Agreement (“BSA”) with
a major satellite service provider. The achievement of this relationship in a
timely manner was critical to launching R&R TV.





The cost
of the R&R TV acquisition is $6.88 million, of which a $250,000 deposit
has been paid. See Note 6 to the consolidated financial statements for
discussion of future debt payments.





The
acquired assets are amortized over their contractual life or estimated useful
life. Amortization of those assets has begun during the third quarter of this
fiscal year.


26


Pursuant
to the Agreement, the Company made a $250,000 initial payment for the assets of
Resort and Residence TV, $175,000 of which was paid at closing and the remaining
$75,000 paid October, 2009. In addition, the Company is required to pay to
Televisual Media $500,000 on the first anniversary of the closing and $750,000
plus interest accrued at 8% annually on the second anniversary of the closing.
The Company also issued a $3,000,000 zero coupon debenture (the “Debenture”) to
Televisual Media payable on June 9, 2012. The Debenture bears interest at 5% per
annum payable in full upon maturity. The Debenture also entitles Televisual
Media to receive 20% of all profits earned from the Resort and Residence TV
assets through maturity, with such proceeds being used towards the retirement of
the Debenture.





In
connection with the Agreement, Televisual Media also receives $3,500,000 of
Secured Series Convertible Preferred Stock (the “Preferred Stock”) of the
Company which collateralizes the final loan payment of $3,500,000 due June 9,
2019. Accordingly, the Preferred Stock is classified as a long-term liability on
the balance sheet and has a mandatory redemption date of June 9, 2019.
Televisual Media has the right to convert the Preferred Stock into 3.5 million
common shares should the network reach a minimum of 17 million households during
the term of the Preferred Stock. The Company has the right to redeem
or force conversion of the Preferred Stock after the first year of
operation of the network.  Should the Company fail to repay the
$3,500,000 loan on June 9, 2019, interest thereafter will be fixed at 1% per
year until such time as the loan is repaid or the Preferred shares are
converted. The Preferred Stock is secured by all of the assets of Resort and
Residence TV.





As of
February 28, 2010, the Company has not issued the Secured Series Convertible
Preferred Stock.





The Home Preview
Channel





On
October 29, 2008, we purchased an aggregate of approximately 115,114 shares of
The Home Preview Channel, Inc. (“HPC”), which represented 100% of the issued and
outstanding shares of common stock of HPC, in exchange for an aggregate of
677,999 of our shares of the Company’s common stock. All of the assets were
included in the sale, free of clear of any and all liens, encumbrances, charges,
securities interests and claims of others.





Loop Networks,
LLC





On
October 29, 2008, we purchased 102,179 membership interests from the Loop
Networks, LLC (“Loop”), representing 100% of the issued and outstanding
membership interests of Loop, in exchange for an aggregate of 5,345,000 shares
of our common stock. Loop is a technology company for TV and Internet
interface.





Brands on
Demand





On April
11, 2008, we acquired Brands on Demand (“BOD”), a media company engaged in
interactive media sales, pursuant to a Stock Purchase Agreement between EVUSA
and James Bradford Heureux, representing all of the shareholders of BOD.
Pursuant to the agreement, EVUSA acquired 50,000 shares of common stock of BOD,
representing 100% off the issued and standing shares of BOD, for an aggregate
purchase price of $140,000 by way of a payment of $70,000 and 50,000,000 shares
of EXVG common stock (which was held by the Company pending certain
fulfillment and earn out conditions being achieved). EVUSA paid Mr. Heureux
$70,000 of the $140,000 purchase price and issued 50,000,000 shares of EVUSA in
trust for 100% of his shares (20,000 shares representing 40% of the issued and
outstanding shares of BOD). EVUSA paid the other stockholders of BOD $70,000 for
100% of their shares of BOD which represented 60% of the total issued and
outstanding stock of BOD (30,000 shares).  As a part of the stock
purchase agreement we entered into an employment agreement with Mr. Heureux
pursuant to which Mr. Heureux served as the Chief Marking Officer of the Company
and as a Director of the Board of Directors. On January 15, 2009, the employment
agreement was terminated and all common stock issued under the agreement was
cancelled and returned to treasury.  Mr. Heureux is no longer employed
by Company nor is he a director of Next 1 Interactive, Inc.





Business





You can
read about our business in the “Business” section of this Annual
Report.


27


Evolving
Industry Standards; Rapid Technological Changes





The
technologies used in the pay television industry are rapidly evolving. Many
technologies and technological standards are in development and have the
potential to significantly transform the ways in which programming is created
and transmitted. We cannot accurately predict the effects that implementing new
technologies will have on our programming and broadcasting operations. We may be
required to incur substantial capital expenditures to implement new
technologies, or, if we fail to do so, may face significant new challenges due
to technological advances adopted by competitors, which in turn could result in
harming our business and operating results.





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





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





Travel
Industry Trends





Our
current revenue is primarily derived from customers accessing our travel
websites: NextTrip.com, Maupintour and Cruise Shoppes. According to
PhoCusWright, 2007 is the first year in which more than half of all travel in
the U.S. was purchased online. The remainder of travel in the U.S. was booked
through traditional offline channels. Suppliers, including airlines, hotels and
car rental companies, have continued to focus their efforts on direct sale of
their products through their own websites, further promoting the migration of
customers to online booking. In the current environment, suppliers' websites are
believed to be taking market share domestically from both online travel
companies ("OTCs") and traditional offline travel companies.





In the
U.S., the booking of air travel has become increasingly driven by price. As a
result, we believe that OTCs will continue to focus on differentiating
themselves from supplier websites by offering customers the ability to
selectively combine travel products such as air, car, hotel and destination
services into one-stop shopping vacation packages.





Despite
the increase in online marketing costs, the continued growth of search and
meta-search sites as well as Web 2.0 features creates new opportunities for
travel websites to add value to the customer experience and generate advertising
revenue. Web 2.0 is a term used to describe content features such as social
networks, blogs, user reviews, videos and podcasts such as our NextTrip.com,
NetTripRadio.com, Maupitour.Com, and CruiseShoppes.com websites. We believe that
the ability of Web 2.0 websites will add value for customers, suppliers and
third-party partners while simultaneously creating new revenue
streams.





Sufficiency
of Cash Flows





Because
current cash balances and projected cash generation from operations are not
sufficient to meet the Company's cash needs for working capital and capital
expenditures, management intends to seek additional equity or obtain additional
credit facilities. The sale of additional equity could result in additional
dilution to the Company's shareholders. A portion of the Company's cash may be
used to acquire or invest in complementary businesses or products or to obtain
the right to use complementary technologies. From time to time, in the ordinary
course of business, the Company evaluates potential acquisitions of such
businesses, products or technologies.


28


RESULTS
OF OPERATIONS





Results
of Operations for the Fiscal Year Ended February 28, 2010 Compared to the Fiscal
Year Ended February 28, 2009





Revenues.Our total revenues
decreased 52% to $1,320,225 for the fiscal year ended February 28, 2010,
compared to $2,755,608 for the fiscal year ended February 28, 2009, a decrease
of $1,435,383. In addition to the general economic environment resulting in a
decline in the travel and leisure industry, the decrease was due primarily to a
shift in the Company’s strategy away from its traditional business model of
providing recreational travel services, to that of a media business with a focus
on travel and residential real estate utilizing the internet, radio and cable
television.





Revenues
from the travel segment decreased 66% to $724,734 for the fiscal year ended
February 28, 2010, compared to $2,142,591 for the fiscal year ended February 28,
2009, a decrease of $1,417,857. Travel revenue is generated from its luxury tour
operation which provides escorted and independent tours worldwide to upscale
travelers. The Company made a strategic decision to direct virtually all of its
limited resources to launching the R&R TV network, thereby diverting
promotional efforts away from its traditional travel business.





Revenues
from advertising decreased 3% to $595,491 for the fiscal year ended February 28,
2010, compared to $613,017 for the fiscal year ended February 28, 2009, a
decrease of $17,526. Advertising revenue is generated from the sale of
advertising time on R&R TV including advertisements shown during a program
(also known as short-form advertising) and infomercials in which the
advertisement is the program itself (also known as long-form advertising). The
ability to sell time for commercial announcements and the rates received are
primarily dependent on the size and nature of the audience that the network can
deliver to the advertiser as well as overall advertiser demand for time on our
network. Advertising revenues were substantially unchanged in fiscal 2010
compared to fiscal 2009 with reductions in showcase and print advertising
revenues offset by revenues from R&R TV network
advertising.





Cost of
revenues.Cost of revenues
increased 145% to $3,456,658 for fiscal 2010, compared to $1,410,113 for the
same year ago period, an increase of $2,046,545. The costs associated with
higher travel revenue in fiscal 2009 were replaced and increased in fiscal 2010
by costs, primarily broadcast carriage fees and production, directly associated
with the launch of the Resort and Residence TV network.





Cost of
revenues from the travel segment decreased 47% to $382,036 for fiscal 2010,
compared to $718,252 for the same year ago period, a decrease of $336,216. The
reduction in cost is directly associated with the reduction in revenue due to a
shift in the Company’s strategy away from its traditional business model of
providing recreational travel services, to that of a media business with a focus
on travel and residential real estate utilizing the internet, radio and cable
television.





Cost of
revenues from advertising increased 66% to $3,160,884 for fiscal 2010, compared
to $1,906,470 for the same year ago period, an increase of $1,254,414. The
increase in cost is a result of the significant additional costs, primarily
carriage fees, directly related to the network launch and on-going operation of
R&R TV.





Operating
expenses.Our
operating expenses include website maintenance fees, general and administrative
expenses, salaries and benefits, advertising and promotion, legal and
professional fees, consulting and finance fees incurred in raising capital and
amortization of intangibles. Our total operating expenses increased 109% from
$4,286,684 for the fiscal year ended February 28, 2009 to $8,955,569 for the
fiscal year ended February 28, 2010, an increase of $4,668,885. The increase was
due primarily to an increase in amortization of intangibles of $1,334,927,
finance and consulting fees incurred in raising capital of $2,651,834 and
payroll and benefits of $604,930. Various other operating expenses account for
the remaining difference of $77,194.





Other expenses:Interest
expense increased 540% to $642,164 in fiscal 2010, compared to $119,195 in
fiscal 2009, an increase of $522,969 due primarily to interest accrued on debt
incurred in the acquisition of Resort and Residence TV assets of $199,318,
amortization on discount on notes payable of $145,000, with the balance of
$178,651 due primarily to interest paid on short-term debt through the issuance
of stock and stock equivalents. Loss on disposal of fixed assets was $128,704 in
fiscal 2010 due to the write off of leased equipment which is no longer used and
abandoned furniture and software acquired with the acquisition of the Home
Preview Channel.


29


Net
Loss. We had a
net loss of $11,864,232 and $3,045,831 for the fiscal years ended February 28,
2010 compared to February 28, 2009. The increase from 2009 to 2010 was primarily
due to the cost incurred to launch and operate a television network as well as
the amortization of significant intangible assets and equity issued in raising
capital.  See following discussions on cost of revenues and operating
expenses and the notesto the consolidated
financial statements included in this Annual Report.





Assets. Our total assets were
$15,405,745 at February 28, 2010 compared to $7,892,437 at February 28, 2009.
The increase from 2009 to 2010 was primarily due to an increase in amortizable
intangible assets from $6,717,109 to $12,099,652, net of
amortization, resulting from our acquisitions of the RRTV assets on August
9, 2009.





Liabilities.
Our total liabilities were $11,597,412 at February 28, 2010 compared to
$2,571,662 at February 28, 2009.





The
increase from 2009 to 2010 was primarily due to an increase in Notes Payable –
Long Term Portion from $628,807 for the fiscal year ended February 28, 2009 to
$6,477,469 for the fiscal year ended February 28, 2010. This increase of
$5,848,662 is due primarily to long-term liabilities incurred in the RRTV asset
acquisition.





Also
contributing to the increase in liabilities was an increase in Related Party
Notes Payable from $221,513 for the fiscal year ended February 28, 2009 to
$1,900,710 for the fiscal year ended February 28, 2010. On March 5, 2010, the
Company entered into a promissory note with a director (“holder”) of the
Company.  Pursuant to the note, the holder has agreed to loan the
Company $3,500,000. The note has an effective date of January 25, 2010 and a
maturity date of January 25, 2011. The note bears interest at 6% per
annum. The holder will advance the funds under the terms of the note in
tranches through April 15, 2010. The balance of the note payable is $1,492,346
at February 28, 2010. In addition, the Company had five outstanding convertible
notes payable with shareholders in the amount of $300,000. Net reductions in
Related Party Notes Payable in the amount of $113,149 were due substantially to
payments to an officer of the Company.





Accounts
Payable and Accrued Expenses increased from $968,452 for the fiscal year ended
February 28, 2009 to $1,429,591 for the fiscal year ended February 28, 2010. The
increase was due primarily to increased accrued interest of $263,213, increased
accrued expenses of $146,980, and increased accounts payable of $92,403 offset
by a reduction in other liabilities of $41,457.





Other
Current Liabilities increased from $550,291 for the fiscal year ended February
28, 2009 to $817,199 for the fiscal year ended February 28, 2010.  The
increase was due primarily to increases in customer deposits of $192,981 for
tours to be taken in the future and increases in contingent liabilities of
$73,927.





Total
Stockholders’ Equity. Our stockholders’ equity was $3,808,333 at February
28, 2010, compared to $5,320,775 at February 28, 2009.





Contractual
Obligations. The following schedule represents obligations under written
commitments on the part of the Company that are not included in
liabilities:





Current
                    
                    
                    Long-TermFY2011
                    
                    
                    FY2012
                    
                    
                    FY 2013
                    
                    
                    TotalsCarriage
      Fees
                    
                    $
                    8,879,000
                    
                    
                    $
                    10,354,000
                    
                    
                    $
                    8,021,000
                    
                    
                    $
                    27,254,000Service
      Providers
                    
                    
                    147,000
                    
                    
                    
                    36,000
                    
                    
                    
                    
                    
                    
                    
                    183,000Leases
                    
                    
                    172,000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    172,000Totals
                    
                    $
                    9,198,000
                    
                    
                    $
                    10,390,000
                    
                    
                    $
                    8,021,000
                    
                    
                    $
                    27,609,000


30


Liquidity
and Capital Resources; Going Concern





At
February 28, 2010, the Company had $211,905 cash on-hand, an increase of
$193,104 from $18,801 at the start of fiscal 2010. The increase in cash was due
primarily to cash provided by debt and equity financing.





Net cash
used by operations was $5,594,177 for the year ended February 29, 2010, an
increase of $3,889,982 from $1,704,195 used during fiscal 2009. This increase
was due to costs, primarily carriage fees, incurred to launch and operate a
television network





Net cash
used in investing activities decreased $186,892 to $328,107 for fiscal 2010
compared to $514,999 for fiscal 2009. Investments in web site development in the
prior year were greater than deposit payments on acquisitions and additional
security deposits made in the current year.





During
the year ended February 28, 2010, net cash provided by financing activities was
$6,115,389 consisting of net proceeds from related party loans of $2,363,194,
proceeds from the sale of equity instruments of $3,795,348 less payments of
capital lease obligations of $43,153.  During the year ended February
28, 2009, net cash provided by financing activities was $2,173,625 consisting
primarily of the sale of equity instruments in the amount of $2,686,000 less
payment of acquisitions of $270,000 and payments on loans and a lease in the
amount of $242,375.





The
R&R network was launched on November 6th 2009
with Comcast and DIRECTV bringing it into roughly 21 million households. In
March 2010 the Company announced a further expansion to 28 million homes with
Capital Broadcasting Corporation and is planning to reach 60 million households
by the end of fiscal 2011. While we expect this market penetration to generate a
substantial increase in operating, marketing, promotion and other expenses, we
also expect that our revenues will ultimately increase sufficiently enough to
cover these increases. Although carriage fees, our largest operating cost, begin
immediately, brand recognition, which will result in greater revenues, takes
time to develop. Accordingly, we believe that our results of operations in
fiscal 2011 will not begin to improve until the fourth quarter.





The
growth and development of our business will require a significant amount of
additional working capital. We currently have limited financial resources and
based on our current operating plan, we will need to raise additional capital in
order to continue as a going concern. We currently do not have adequate cash to
meet our short or long term objectives. In the event additional capital is
raised, it may have a dilutive effect on our existing stockholders.





Since our
inception in June 2002, we have been focused on the travel industry solely
through the internet. We have recently changed our business model from a company
that generates nearly all revenues from its travel divisions to a media company
focusing on travel and real estate by utilizing multiple media platforms
including the internet, radio and television. As a company that has recently
changed our business model and emerged from the development phase with a limited
operating history, we are subject to all the substantial risks inherent in the
development of a new business enterprise within an extremely competitive
industry. We cannot assure you that the business will continue as a going
concern or ever achieve profitability. Due to the absence of an operating
history under the new business model and the emerging nature of the markets in
which we compete, we anticipate operating losses until such time as we can
successfully implement our business strategy, which includes all associated
revenue streams.





Since our
inception, we have financed our operations through numerous debt and equity
issuances.





The
Company will need to raise substantial additional capital to support the
on-going operation and increased market penetration of R&RTV including the
development of national sales representation for national and global advertising
and sponsorships, increases in operating costs resulting from additional staff
and office space until such time as we generate revenues sufficient to support
the business.  We believe that in the aggregate, we will need
approximately $10 million to $15 million to support and expand the network
reach, repay debt obligations, provide capital expenditures for additional
equipment and satisfy payment obligations under carriage/distribution
agreements, office space and systems required to manage the business, and cover
other operating costs until our planned revenue streams from media advertising,
sponsorships, e-commerce, travel and real estate are fully-implemented and begin
to offset our operating costs.  There can be no assurances that the
Company will be successful in raising the required capital to complete this
portion of its business plan.


31


To date,
we have funded our operations with the proceeds from the private equity
financings. The Company issued these shares without registration under the
Securities Act of 1933, as amended, afforded the Company under Section 4(2)
promulgated thereunder due to the fact that the issuance did not involve a
public offering of securities. The shares were sold solely to “accredited
investors” as that term is defined in the Securities Act of 1933, as amended,
and pursuant to the exemptions from the registration requirements of the
Securities Act under Section 4(2) and Regulation D thereunder.





Currently,
revenues provide approximately 10% of the company’s cash requirements. The
remaining cash need is derived from raising additional capital. The current
monthly cash burn rate is approximately $1.0 million. With the successful launch
of the television network in November, 2009, virtually all of the associated
expenses began immediately. However, it will take several months to drive
viewers to the network which will subsequently improve visibility and increase
our advertising client base and advertising and sponsorship rates. We expect the
monthly cash burn rate will gradually increase to approximately $1.4 million,
with the expectation of profitability by the fourth quarter of fiscal
2011.





Our
multi-platform media revenue model is new and evolving, and we cannot be certain
that it will be successful. The potential profitability of this business model
is unproven and there can be no assurance that we can achieve profitable
operations. Our ability to generate revenues depends, among other things, on our
ability to operate our television network and create enough viewership to
provide advertisers, sponsors, travelers and home buyers value. Accordingly, we
cannot assure you that our business model will be successful or that we can
sustain revenue growth, or achieve or sustain profitability.





Summary
of Business Operations and Significant Accounting Policies





Nature of
Operations and Business Organization





Next 1
Interactive, Inc. (“Next 1”), an interactive media company, focuses on video and
media advertising over Internet and Television platforms. Historically, the
Company operated through two divisions, Media and Travel. A third (Real Estate)
division is expected to launch during the second quarter of fiscal
2011.





The Media
division targets two of the most universal, yet powerful consumer-passion
categories - real estate and travel. The Company broadcasts a 24/7 digital
television network called “R&R TV”via satellite and
cable carriers. In addition, the Company delivers other digital targeted content
via Broadband, Web, Print and Mobile. The Company’s other media platforms
include a real estate Video-On-Demand (“VOD”) channel called Home TV on Demand (“Home TV”),
a web radio network called “R&R Radio” and multiple
websites including “RRTV.com” which features live
streaming of its television network over the web. Revenues from the Media
division include advertising fees from advertisements and programming aired on
the R&R TV network and production services.





The
Travel division operates NextTrip.com, a travel site that includes
user-generated content, social networking, a directory of travel affiliate
links, and travel business showcases. In addition, this division operates as a
luxury tour operator offering escorted and independent tours worldwide to
upscale travelers. Revenues from the Travel division include the sale of
escorted and independent tours.





The
Company was initially incorporated as Extraordinary Vacations Group, Inc. in the
state of Delaware on June 24, 2002 and focused on the travel industry solely
through the Internet.





On
October 9, 2008, the Company acquired the majority of shares in Maximus
Exploration Corporation, a reporting shell company, pursuant to a Share Exchange
Agreement. The Share Exchange provides for the exchange rate of 1 share of
Maximus common stock for 60 shares Extraordinary Vacations USA common stock. The
financial statements of Next 1, Interactive, Inc. reflects the retroactive
effect of the Share Exchange as if it had occurred at the beginning of the
reporting period. All loss per share amounts are reflected based on Next 1
shares outstanding, basic and dilutive.





Principles
of Consolidation


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


32


Use
of Estimates


The
Company’s significant estimates include allowance for doubtful accounts and
accrued expenses. These estimates and assumptions affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. While the Company
believes that such estimates are fair when considered in conjunction with the
financial statements taken as a whole, the actual amounts of such estimates,
when known, will vary from these estimates. If actual results significantly
differ from the Company’s estimates, the Company’s financial condition and
results of operations could be materially impacted.





Accounts
Receivable


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





Property
and Equipment


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





Impairment
of Long-Lived Assets


In
accordance with Accounting Standards Codification 360-10, "Property, Plant and
Equipment", the Company periodically reviews its long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be fully recoverable. The Company
recognizes an impairment loss when the sum of expected undiscounted future cash
flows is less than the carrying amount of the asset. The amount of impairment is
measured as the difference between the asset’s estimated fair value and its book
value.





During
the year ended February 28, 2010, the Company identified and recognized impaired
losses of $116,000 on long-lived assets.





Website
Development Costs


The
Company accounts for website development costs in accordance with Accounting
Standards Codification 350-50 “Website Development
Costs”.  Accordingly, all costs incurred in the planning stage are
expensed as incurred, costs incurred in the website application and
infrastructure development stage that meet specific criteria are capitalized and
costs incurred in the day to day operation of the website are expensed as
incurred.





Management
placed the website into service during the fiscal year ended February 28, 2010,
subject to straight-line amortization over a three year period.




Goodwill
and Intangible Assets


The
Company applies Accounting Standards Codification 350-20 “Goodwill and Other”,
which established accounting and reporting requirements for goodwill and other
intangible assets. The standard requires that all intangible assets acquired
that are obtained through contractual or legal right, or are capable of being
separately sold, transferred, licensed, rented or exchanged must be recognized
as an asset apart from goodwill. Intellectual properties obtained through
acquisition, with indefinite lives, are not amortized, but are subject to an
annual assessment for impairment by applying a fair value based test.
Intellectual properties that have finite useful lives are amortized over their
useful lives. Amortization expense for the years ended February 28, 2010 and
2009 was $1,670,784 and $335,856, respectively.


33




Earnings
Per Share


Earnings
per share are reported pursuant to the provisions of FASB ASC 210. Accordingly,
basic earnings per share reflects the weighted average number of shares
outstanding during the year, and diluted shares adjusts that figure by the
additional hypothetical shares that would be outstanding if all exercisable
outstanding common stock equivalents with an exercise price below the current
market value of the underlying stock were exercised. Common stock equivalents
consist of stock options and warrants. Basic earnings per share are computed by
dividing net earnings available to common shareholders by the weighted average
number of shares outstanding during the period. Diluted earnings per share are
computed assuming the exercise of stock options under the treasury stock method
and the related income taxes effects, if not anti-dilutive. For loss periods
common share equivalents are excluded from the calculation, as the effect would
be anti-dilutive.





Revenue
Recognition


For
advertising services, the Company recognizes revenue in the period when
advertisements are either aired or published. Revenues from advertising barter
transactions are recognized in the period during which the advertisements are
either aired or published. Expenses from barter transactions are recognized in
the period as incurred. Barter transactions are accounted in accordance with
EITF Issue No. 99-17 “Accounting for Advertising Barter
Transactions”(ASC Topic 605-20-25), which are recorded at the fair value
of the advertising provided based on the Company’s own historical practice of
receiving cash for similar advertising from buyers unrelated to the counterparty
in the barter transactions. The barter transactions that have occurred since
launching the television network in November of 2009 are immaterial. The amounts
included in advertising services revenue and general and administrative for
barter transactions were approximately $nil and $nil for the fiscal years ended
February 28, 2010 and 2009 respectively.





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




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




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




Cost
of Revenues


Cost of
revenues includes costs directly attributable to services sold and delivered.
These costs include such items as broadcast carriage fees, costs to produce
television content, sales commission to business partners, hotel and airfare,
cruises and membership fees.





Sales
and Marketing


Sales and
marketing expenses consist primarily of advertising and promotional expenses,
salary expenses associated with sales and marketing staff, expenses related to
our participation in industry conferences, and public relations
expenses.  The goal of our advertising is to acquire new subscribers
for our e-mail products, increase the traffic to our Web sites, and increase
brand awareness.


34


Advertising
Expense


Advertising
costs are charged to expense as incurred and are included in selling and
promotions expense in the accompanying financial statements. Advertising expense
for the years ended February 28, 2010 and February 28, 2009 was $71,260 and
$42,335, respectively.





Share
Based Compensation


The
Company computes share based payments in accordance with Accounting Standards
Codification 718-10 “Compensation” (ASC 718-10). ASC 718-10 establishes
standards for the accounting for transitions in which an entity exchanges its
equity instruments for goods and services at fair value, focusing primarily on
accounting for transactions in which an entity obtains employees services in
share-based payment transactions. It also addresses transactions in which an
entity incurs liabilities in exchange for goods and services that are based on
the fair value of an entity’s equity instruments or that may be settled by the
issuance of those equity instruments.





In March
2005 the SEC issued SAB No. 107, Share-Based Payment (“SAB 107”) which provides
guidance regarding the interaction of ASC 718-10 and certain SEC rules and
regulations. The Company has applied the provisions of SAB 107 in its adoption
of ASC 718-10.





Income
taxes


The
Company accounts for income taxes in accordance with ASC 740, Accounting for
Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income
Taxes.  Under this method, deferred income taxes are determined based on
the estimated future tax effects of differences between the financial statement
and tax basis of assets and liabilities given the provisions of enacted tax
laws. Deferred income tax provisions and benefits are based on changes to the
assets or liabilities from year to year. In providing for deferred taxes, the
Company considers tax regulations of the jurisdictions in which the Company
operates, estimates of future taxable income, and available tax planning
strategies. If tax regulations, operating results or the ability to implement
tax-planning strategies vary, adjustments to the carrying value of deferred tax
assets and liabilities may be required. Valuation allowances are recorded
related to deferred tax assets based on the “more likely than not” criteria of
ASC 740.





ASC
740-10 requires that the Company recognize the financial statement benefit of a
tax position only after determining that the relevant tax authority would more
likely than not sustain the position following an audit. For tax positions
meeting the “more-likely-than-not” threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than
50 percent likelihood of being realized upon ultimate settlement with the
relevant tax authority.




Fair
Value of Financial Instruments


The
Company adopted ASC topic 820, “Fair Value Measurements and Disclosures” (ASC
820), formerly SFAS No. 157 “Fair Value Measurements,” effective
January 1, 2009. ASC 820 defines “fair value” as the price that would be
received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. There was no
impact relating to the adoption of ASC 820 to the Company’s financial
statements.




ASC 820
also describes three levels of inputs that may be used to measure fair
value:




•
            Level
      1: Observable inputs that reflect unadjusted quoted prices for identical
      assets or liabilities traded in active
markets.




•
            Level
      2: Inputs other than quoted prices included within Level 1 that are
      observable for the asset or liability, either directly or
      indirectly.




•
            Level
      3: Inputs that are generally unobservable. These inputs may be used with
      internally developed methodologies that result in management’s best
      estimate of fair value.


35


Financial
instruments consist principally of cash, accounts receivable, prepaid expenses,
accounts payable, accrued liabilities and other current liabilities. The
carrying amounts of such financial instruments in the accompanying balance
sheets approximate their fair values due to their relatively short- term nature.
The fair value of long-term debt is based on current rates at which the Company
could borrow funds with similar remaining maturities. The carrying amounts
approximate fair value. It is management’s opinion that the Company is not
exposed to any significant currency or credit risks arising from these financial
instruments.





Recent
Accounting Pronouncements


In June
2009, the FASB established the Accounting Standards Codification (“Codification”
or “ASC”) as the source of authoritative accounting principles recognized by the
FASB to be applied by nongovernmental entities in the preparation of financial
statements in accordance with generally accepted accounting principles in the
United States (“GAAP”).  Rules and interpretive releases of the
Securities and Exchange Commission (“SEC”) issued under authority of federal
securities laws are also sources of GAAP for SEC registrants. Existing GAAP was
not intended to be changed as a result of the Codification, and accordingly the
change did not impact our financial statements. The ASC does change the way the
guidance is organized and presented.




In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
guidance now codified as FASB ASC Topic 820, “Fair Value Measurements and
Disclosures,”which defines fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements. The
pronouncement is effective for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. In February 2008, the FASB
released additional guidance now codified under FASB ASC Topic 820, which
provides for delayed application of certain guidance related to non-financial
assets and non-financial liabilities, except for items that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually), until fiscal years beginning after November 15, 2008, and
interim periods within those years. Pursuant to the requirements of FASB ASC
Topic 820, we adopted the provisions of Topic 820 with respect to our
non-financial assets and non-financial liabilities effective April 1, 2009.
The implementation of this pronouncement had no impact on our consolidated
financial position, results of operations or cash flows.





In
May 2009, the FASB issued Accounting Standards Codification No. ASC
855-10, “Subsequent
Events” (“ASC No. 855-10”). ASC No. 855-10 establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date, but before financial statements are issued or are available
to be issued. In particular, this Statement sets forth:





1.
            The
      period after the balance sheet date during which management of a reporting
      entity should evaluate events or transactions that may occur for potential
      recognition or disclosure in the financial
  statements


2.
            The
      circumstances under which an entity should recognize events or
      transactions occurring after the balance sheet date in its financial
      statements


3.
            The
      disclosures that an entity should make about events or transactions that
      occurred after the balance sheet
date.





ASC
No. 855-10 was adopted by the Company on June 15, 2009, and did not
have a material impact on the Company’s consolidated financial
statements.




In
April 2009, the FASB issued guidance now codified as FASB ASC Topic 825,
“Financial Instruments,”which amends previous Topic 825 guidance to require disclosures about
fair value of financial instruments in interim as well as annual financial
statements. This pronouncement is effective for periods ending after
June 15, 2009. The adoption of this pronouncement did not have an
impact on our consolidated financial position, results of operations or cash
flows.




In
May 2009, the FASB issued guidance now codified as FASB ASC Topic 855,
“Subsequent Events,”
which establishes general standards of accounting for, and disclosures of,
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. Although there is new terminology, the
standard is based on the same principles as those that currently exist in the
auditing standards. The standard, which includes a new required disclosure
of the date through which an entity has evaluated subsequent events, is
effective for interim or annual periods ending after June 15, 2009. We
adopted FASB ASC Topic 855 on June 30, 2009 with no material effects to the
financial results of the Company.


36




In
January 2010, the FASB amended its guidance now codified as FASB ASC Topic
505-20, “Equity – Stock Dividends and Stock Splits,” to clarify that the stock
portion of a distribution to shareholders that allows them to elect to receive
cash or stock with a limit on the amount of cash that will be distributed is not
a stock dividend for purposes of applying Topics 505 and 260. These
provisions of FASB ASC Topic 505 are effective for interim and annual periods
ending after December 15, 2009 and, accordingly, are effective for us for
the current fiscal reporting period. The adoption of this pronouncement did not
have an impact on our financial condition or results of operations as we do not
currently have distributions that allow shareholders such an
election.




In
January 2010, the FASB amended guidance now codified as FASB ASC Topic 810,
“Consolidation.” FASB
ASC Topic 810 changes the accounting and reporting for minority interests, which
will be recharacterized as non-controlling interests and classified as a
component of equity. The amendment of FASB ASC Topic 810-10 establishes the
accounting and reporting guidance for non-controlling interests and changes in
ownership interests of a subsidiary. FASB ASC Topic 810 is effective for us
on a prospective basis for business combinations with an acquisition date
beginning in the first quarter of fiscal year 2010. The adoption of FASB
ASC Topic 810 as amended did not have an impact on our consolidated financial
statements.




A variety
of proposed or otherwise potential accounting standards are currently under
study by standard-setting organizations and various regulatory agencies. Because
of the tentative and preliminary nature of these proposed standards, management
has not determined whether implementation of such proposed standards would be
material to our consolidated financial statements.





Item
7A.  Quantitative and Qualitative Disclosures about Market
Risk





Not
applicable.




37




Item
8.  Financial Statements and Supplementary Data.





Our
consolidated financial statements are contained in pages F-1
through F-33 which appear at the end of this annual report.


Next
1 Interactive, Inc.
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors
 Next 1
Interactive, Inc.
 Weston,
Florida
 
 We have
audited the accompanying consolidated balance sheets of Next 1 Interactive, Inc.
as of February 28, 2010 and February 28, 2009 and the related consolidated
statements of operations, changes in stockholders' equity (deficit) and cash
flows for the years then ended.  These consolidated financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audits include
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purposes of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting.  Accordingly, we express no
such opinion.  An audit includes examining on a test basis, evidence
supporting the amount and disclosures in the consolidated financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Next 1 Interactive, Inc. as
of February 28, 2010 and February 28, 2009, and the results of their operations
and their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
 
 The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company had an accumulated deficit of
$28,426,928 and a working capital deficit of $3,821,197 at February 28, 2010,
net losses for the year ended February 28, 2010 of $10,329,599 and cash used in
operations during the year ended February 28, 2010 of $5,589,426. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
 
 /s/ Kramer, Weisman and Associates,
      LLPCertified
      Public AccountantsDavie,
      FloridaJune
      8, 2010
  F-1
 Next 1
Interactive, Inc. and Subsidiaries
 Consolidated
Balance Sheets
 
 February 28, 2010
                      
                      
                      February 28, 2009AssetsCurrent
      AssetsCash
                      
                      $
                      211,905
                      
                      
                      $
                      18,801Accounts
      receivable, net of allowance for doubtful accounts
                      
                      
                      166,059
                      
                      
                      
                      125,783Prepaid
      expenses and other current assets
                      
                      
                      2,378,450
                      
                      
                      
                      15,612Security
      deposits
                      
                      
                      206,346
                      
                      
                      
                      128,239Total
      current assets
                      
                      
                      2,962,760
                      
                      
                      
                      288,435Property
      and equipment, net
                      
                      
                      -
                      
                      
                      
                      190,765Other
      assets
                      
                      
                      -
                      
                      
                      
                      181,130Development
      costs, net
                      
                      
                      343,333
                      
                      
                      
                      514,998Amortizable
      intangible assets, net
                      
                      
                      12,099,652
                      
                      
                      
                      6,717,109Total
      assets
                      
                      $
                      15,405,745
                      
                      
                      $
                      7,892,437Liabilities
      and Stockholders' Equity (Deficit)Current
      LiabilitiesAccounts
      payable and accrued expenses
                      
                      $
                      1,429,591
                      
                      
                      $
                      968,452Other
      current liabilities
                      
                      
                      817,199
                      
                      
                      
                      550,291Related
      party notes payable
                      
                      
                      1,900,710
                      
                      
                      
                      221,513Capital
      lease payable - current portion
                      
                      
                      51,928
                      
                      
                      
                      43,163Notes
      payable - current portion
                      
                      
                      900,963
                      
                      
                      
                      87,966Total
      current liabilities
                      
                      
                      5,100,391
                      
                      
                      
                      1,871,385Capital
      lease payable - long-term portion
                      
                      
                      19,552
                      
                      
                      
                      71,470Notes
      payable - long-term portion
                      
                      
                      6,477,469
                      
                      
                      
                      628,807Total
      liabilities
                      
                      
                      11,597,412
                      
                      
                      
                      2,571,662Stockholders'
      Equity (Deficit)Series
      A Preferred stock,  $.01 par value; 3,000,000 authorized; and
      579,763 and 504,763 shares issued and outstanding at February 28, 2010 and
      February 28, 2009 respectively
                      
                      
                      5,798
                      
                      
                      
                      5,048Series
      B Preferred stock, $1 par value; 3,000,000 authorized; 0 shares issued and
      outstanding at February 28, 2010 and February 28, 2009
      respectively
                      
                      
                      -
                      
                      
                      
                      -Series
      C Preferred stock, $.01 par value; 1,750,000 authorized; 0 shares issued
      and outstanding at February 28, 2010 and February 28, 2009
      respectively
                      
                      
                      -
                      
                      
                      
                      -Common
      stock, $.00001 par value; 200,000,000 shares authorized; 32,756,045 and
      24,668,231 shares issued and outstanding at February 28, 2010 and February
      28, 2009 respectively
                      
                      
                      328
                      
                      
                      
                      247Additional
      paid-in-capital
                      
                      
                      33,763,778
                      
                      
                      
                      23,412,819Accumulated
      deficit
                      
                      
                      (29,961,571
                      )
                      
                      
                      (18,097,339
                      )Total
      stockholders' equity  (deficit)
                      
                      
                      3,808,333
                      
                      
                      
                      5,320,775Total
      liabilities and stockholders' equity (deficit)
                      
                      $
                      15,405,745
                      
                      
                      $
                      7,892,437
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-2
 
 Next 1
Interactive, Inc. and Subsidiaries
 Consolidated
Statements of Operations
 For the
year ended February 28, 2010 and 2009
 
 February 282010
                      
                      
                      2009RevenuesTravel
      and commission revenues
                      
                      $
                      724,734
                      
                      
                      $
                      2,142,591Advertising
      revenues
                      
                      
                      595,491
                      
                      
                      
                      613,017Total
      revenues
                      
                      
                      1,320,225
                      
                      
                      
                      2,755,608Cost
      of revenues
                      
                      
                      3,456,658
                      
                      
                      
                      1,410,113Gross
      profit (Loss)
                      
                      
                      (2,136,433
                      )
                      
                      
                      1,345,495Operating
      expensesSalaries
      & benefits
                      
                      
                      1,936,501
                      
                      
                      
                      1,553,546Selling
      and promotions expense
                      
                      
                      71,260
                      
                      
                      
                      42,335General
      & administrative
                      
                      
                      6,947,808
                      
                      
                      
                      2,690,803Total
      operating expenses
                      
                      
                      8,955,569
                      
                      
                      
                      4,286,684Operating
      income (loss)
                      
                      
                      (11,092,002
                      )
                      
                      
                      (2,941,189
                      )Other
      income/(expense)Interest
      expense
                      
                      
                      (642,164
                      )
                      
                      
                      (119,195
                      )Gain
      on forgiveness of debt
                      
                      
                      9,650
                      
                      
                      
                      -Loss
      on disposal of assets
                      
                      
                      (128,704
                      )Other
      expense
                      
                      
                      (11,012
                      )
                      
                      
                      14,553Total
      other income (expense)
                      
                      
                      (772,230
                      )
                      
                      
                      (104,642
                      )Net
      loss
                      
                      $
                      (11,864,232
                      )
                      
                      $
                      (3,045,831
                      )Weighted
      average number of shares outstanding
                      
                      
                      27,016,912
                      
                      
                      
                      13,448,861Basic
      and diluted net loss per share
                      
                      $
                      (0.44
                      )
                      
                      $
                      (0.23
                      )
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-3
 
 Next 1
Interactive, Inc. and Subsidiaries
 Consolidated
Statement of Changes in Stockholders Equity (Deficit)
 
 Additional
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    Stockholders'Preferred Stock A
                                                    
                                                    
                                                    Preferred Stock B
                                                    
                                                    
                                                    Preferred Stock C
                                                    
                                                    
                                                    Common Stock
                                                    
                                                    
                                                    Paid-in
                                                    
                                                    
                                                    Accumulated
                                                    
                                                    
                                                    EquityShares
                                                    
                                                    
                                                    Amount
                                                    
                                                    
                                                    Shares
                                                    
                                                    
                                                    Amount
                                                    
                                                    
                                                    Shares
                                                    
                                                    
                                                    Amount
                                                    
                                                    
                                                    Shares
                                                    
                                                    
                                                    Amount
                                                    
                                                    
                                                    Capital
                                                    
                                                    
                                                    Deficit
                                                    
                                                    
                                                    (Deficit)Balances,
      February 29, 2008
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,369,643
                                                    
                                                    
                                                    $
                                                    13,696
                                                    
                                                    
                                                    
                                                    1,152,000
                                                    
                                                    
                                                    $
                                                    1,152,000
                                                    
                                                    
                                                    
                                                    5,249,277
                                                    
                                                    
                                                    $
                                                    314,957
                                                    
                                                    
                                                    $
                                                    12,189,696
                                                    
                                                    
                                                    $
                                                    (15,051,508
                                                    )
                                                    
                                                    $
                                                    (1,381,159
                                                    )Preferred
      stock  issued for cash
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    180,000
                                                    
                                                    
                                                    
                                                    1,800
                                                    
                                                    
                                                    
                                                    350,000
                                                    
                                                    
                                                    
                                                    350,000
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    178,200
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    530,000Common
      stock issued for cash
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    3,326,677
                                                    
                                                    
                                                    
                                                    1,957
                                                    
                                                    
                                                    
                                                    2,154,042
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    2,155,999Series
      C preferred stock converted to common stock
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (1,502,000
                                                    )
                                                    
                                                    
                                                    (1,502,000
                                                    )
                                                    
                                                    
                                                    2,503,333
                                                    
                                                    
                                                    
                                                    1,502
                                                    
                                                    
                                                    
                                                    1,500,498
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Common
      stock issued in exchange for services
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,443,706
                                                    
                                                    
                                                    
                                                    866
                                                    
                                                    
                                                    
                                                    937,543
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    938,409Common
      stock issued in connection with acquisition of Brands on
      Demand
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    666,667
                                                    
                                                    
                                                    
                                                    400
                                                    
                                                    
                                                    
                                                    69,600
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    70,000-Reverse
      merger with Maximus
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    511,500
                                                    
                                                    
                                                    
                                                    (319,545
                                                    )
                                                    
                                                    
                                                    48,312
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (271,233
                                                    )Common
      stock and Series A preferred stock issued in exchange for Series B
      preferred stock
                                                    
                                                    
                                                    504,763
                                                    
                                                    
                                                    
                                                    5,048
                                                    
                                                    
                                                    
                                                    (1,549,643
                                                    )
                                                    
                                                    
                                                    (15,496
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    5,000,000
                                                    
                                                    
                                                    
                                                    50
                                                    
                                                    
                                                    
                                                    10,399
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1Common
      stock issued in connection with acquisitions of Home Preview Channel and
      Loop Networks
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    6,022,999
                                                    
                                                    
                                                    
                                                    60
                                                    
                                                    
                                                    
                                                    6,143,399
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    6,143,459Detachable
      warrants issued in connection with debt restructure
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    181,130
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    181,130Fractional
      share adjustment
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (55,917
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Net
      loss
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (3,045,831
                                                    )
                                                    
                                                    
                                                    (3,045,831
                                                    )Balances,
      February 28, 2009
                                                    
                                                    
                                                    504,763
                                                    
                                                    
                                                    
                                                    5,048
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    24,668,242
                                                    
                                                    
                                                    
                                                    247
                                                    
                                                    
                                                    
                                                    23,412,819
                                                    
                                                    
                                                    
                                                    (18,097,339
                                                    )
                                                    
                                                    
                                                    5,320,775Common
      stock issued for cash
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,110,910
                                                    
                                                    
                                                    
                                                    11
                                                    
                                                    
                                                    
                                                    940,337
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    940,348Sale
      of private placement units consisting of one share of common stock and one
      warrant
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    2,570,000
                                                    
                                                    
                                                    
                                                    26
                                                    
                                                    
                                                    
                                                    2,854,973
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    2,854,999Common
      stock issued in exchange for services
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,838,933
                                                    
                                                    
                                                    
                                                    18
                                                    
                                                    
                                                    
                                                    5,279,565
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    5,279,583Warrants
      issued as interest
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    123,549
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    123,549Common
      stock and warrants issued in connection with conversion of notes payable
      and interest due
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    785,733
                                                    
                                                    
                                                    
                                                    8
                                                    
                                                    
                                                    
                                                    715,267
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    715,275Preferred
      and common stock issued for accounts payable and accrued
      expenses
                                                    
                                                    
                                                    368,862
                                                    
                                                    
                                                    
                                                    3,689
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    61,807
                                                    
                                                    
                                                    
                                                    1
                                                    
                                                    
                                                    
                                                    434,335
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    438,024Series
      A preferred stock converted to common stock
                                                    
                                                    
                                                    (293,862
                                                    )
                                                    
                                                    
                                                    (2,939
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    587,724
                                                    
                                                    
                                                    
                                                    6
                                                    
                                                    
                                                    
                                                    2,933
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    0Cancellation
      and return of common stock
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (1,132,818
                                                    )
                                                    
                                                    
                                                    (11
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (11
                                                    )Common
      stock issued to replace shares of Extraordinary Vacations USA, Inc. in
      connection with share exchange agreement
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    577,647
                                                    
                                                    
                                                    
                                                    6
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    6Common
      stock issued for acquisition of former assets of Extraordinary Vacations
      USA, Inc.
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,687,867
                                                    
                                                    
                                                    
                                                    17
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    17Net
      loss
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (11,864,232
                                                    )
                                                    
                                                    
                                                    (11,864,232
                                                    )Balances,
      February 28, 2010
                                                    
                                                    
                                                    579,763
                                                    
                                                    
                                                    $
                                                    5,798
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    32,756,045
                                                    
                                                    
                                                    $
                                                    328
                                                    
                                                    
                                                    $
                                                    33,763,778
                                                    
                                                    
                                                    $
                                                    (29,961,571
                                                    )
                                                    
                                                    $
                                                    3,808,333
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-4
 
 Next 1
Interactive, Inc. and Subsidiaries
 Consolidated
Statements of Cash Flows
 For the
year ended February 29, 2010 and 2009
 
 February 282010
                              
                              
                              2009Cash
      flow from operating activities:Net
      loss
                              
                              $
                              (11,864,232
                              )
                              
                              $
                              (3,045,831
                              )Adjustments
      to reconcile net loss to net cash fromoperating
      activities:Gain
      on forgiveness of debt
                              
                              
                              (9,650
                              )
                              
                              
                              -Loss
      on disposal of fixed assets
                              
                              
                              128,704
                              
                              
                              
                              -Depreciation
      and amortization
                              
                              
                              1,733,023
                              
                              
                              
                              436,471Discount
      on note payable
                              
                              
                              
                              
                              
                              
                              (181,300
                              )Amortization
      of discount on notes payable
                              
                              
                              144,904
                              
                              
                              
                              -Stock
      and warrants issued for services
                              
                              
                              5,279,583
                              
                              
                              
                              938,409Warrants
      issued for interest
                              
                              
                              123,549Changes
      in operating assets and liabilities:(Increase)
      in accounts receivable
                              
                              
                              (40,276
                              )
                              
                              
                              (77,534
                              )(Increase)
      in prepaid expenses and other current assets
                              
                              
                              (2,362,885
                              )
                              
                              
                              (15,612
                              )Increase
      in accounts payable and accrued expenses
                              
                              
                              1,006,194
                              
                              
                              
                              128,702Increase
      in other current liabilities
                              
                              
                              266,908
                              
                              
                              
                              112,500Net
      cash (used in) operating activities
                              
                              
                              (5,594,177
                              )
                              
                              
                              (1,704,195
                              )Cash
      flows from investing activities:Cash
      payment made in connection with asset acquisition
                              
                              
                              (250,000
                              )
                              
                              
                              -Technology
      development costs
                              
                              
                              -
                              
                              
                              
                              (514,999
                              )Decrease
      (increase) in security deposits
                              
                              
                              (78,107
                              )
                              
                              
                              -Net
      cash provided by (used in) investing activities
                              
                              
                              (328,107
                              )
                              
                              
                              (514,999
                              )Cash
      flows from financing activities:Net
      proceeds from (payments of) related party loans
                              
                              
                              2,363,194
                              
                              
                              
                              (117,318
                              )Payments
      of notes payable
                              
                              
                              -
                              
                              
                              
                              (83,204
                              )Proceeds
      from note payable
                              
                              
                              -
                              
                              
                              
                              -Payments
      of capital lease payable
                              
                              
                              (43,153
                              )
                              
                              
                              (41,853
                              )Proceeds
      from the sale of common stock, preferred stock and
warrants
                              
                              
                              3,795,348
                              
                              
                              
                              2,686,000Purchase
      of common stock of Maximus
                              
                              
                              -
                              
                              
                              
                              (200,000
                              )Cash
      payment for acquisition of Brands on Demand
                              
                              
                              -
                              
                              
                              
                              (70,000
                              )Net
      cash provided by financing activities
                              
                              
                              6,115,389
                              
                              
                              
                              2,173,625Net
      increase (decrease) in cash
                              
                              
                              193,105
                              
                              
                              
                              (45,568
                              )Cash
      at beginning of period
                              
                              
                              18,801
                              
                              
                              
                              64,369Cash
      at end of period
                              
                              $
                              211,905
                              
                              
                              $
                              18,801Supplemental
      disclosure:Cash
      paid for interest
                              
                              $
                              17,780
                              
                              
                              $
                              19,091Supplemental
      disclosure of non-cash investing and financing activity:During
      the year ended February 28, 2010, the Company acquired intangible and
      tangible assets of approximately $6,881,659 in exchange for
      debt.During
      the year ended February 28, 2010 the Company converted notes payable and
      accrued interest in the amount of $715,275 for 785,733 shares of common
      stockDuring
      the year ended February 28, 2010 the Company converted accounts payable
      and accrued expenses of $438,024 for 368,862 shares of preferred stock and
      61,807 shares of common stockDuring
      the year ended February 28, 2009, the Company acquired intangible and
      tangible assets of approximately $7,251,967 in exchange for common
      stock.During
      the year ended February 28, 2009 contingent liabilities in the amount of
      $420,042 assumed in connection with the purchase of Maupintour
      LLC
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-5
  Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 
 Note
1 - Summary of Business Operations and Significant Accounting
Policies
 
 Nature of
Operations and Business Organization
 
 Next 1
Interactive, Inc. (“Next 1”), an interactive media company, focuses on video and
media advertising over Internet, Mobile and Television platforms. Historically,
the Company operated through two divisions, Media and Travel. A third (Real
Estate) division is expected to launch during the second quarter of fiscal
2011.
 
 The Media
division targets real estate and travel. The Company broadcasts a 24/7 digital
television network called “R&R TV”via satellite and
cable carriers. In addition, the Company delivers other digital targeted content
via Broadband, Web, Print and Mobile. The Company’s other media platforms
include a real estate Video-On-Demand (“VOD”) channel called Home TV on Demand (“Home TV”),
a web radio network called “R&R Radio” and multiple
websites including “RRTV.com” which features live
streaming of its television network over the web. Revenues from the Media
division include advertising fees from advertisements and programming aired on
the R&R TV network and production services.
 
 The
Travel division operates NextTrip.com, a travel site that includes
user-generated content, social networking, a directory of travel affiliate
links, and travel business video showcases. In addition, this division operates
as a luxury tour operator offering escorted and independent tours worldwide to
upscale travelers and a cruise consortium offering marketing and technology
solutions for independent cruise agencies. Revenues from the Travel division
include the sale of escorted and independent tours.
 
 The
Company was initially incorporated as Extraordinary Vacations Group, Inc. in the
state of Delaware on June 24, 2002 and focused on the travel industry solely
through the Internet.
 
 On
October 9, 2008, the Company acquired the majority of shares in Maximus
Exploration Corporation, a reporting shell company, pursuant to a Share Exchange
Agreement. The Share Exchange provides for the exchange rate of 1 share of
Maximus common stock for 60 shares Extraordinary Vacations USA common stock. The
financial statements of Next 1, Interactive, Inc. reflects the retroactive
effect of the Share Exchange as if it had occurred at the beginning of the
reporting period. All loss per share amounts are reflected based on Next 1
shares outstanding, basic and dilutive.
 
 Principles
of Consolidation
 The
accompanying consolidated audited financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All material inter-company
transactions and accounts have been eliminated in
consolidation.
  F-6
  Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 Use
of Estimates
 The
Company’s significant estimates include allowance for doubtful accounts and
accrued expenses. These estimates and assumptions affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. While the Company
believes that such estimates are fair when considered in conjunction with the
financial statements taken as a whole, the actual amounts of such estimates,
when known, will vary from these estimates. If actual results significantly
differ from the Company’s estimates, the Company’s financial condition and
results of operations could be materially impacted.
 
 Accounts
Receivable
 The
Company extends credit to its customers in the normal course of business.
Further, the Company regularly reviews outstanding receivables, and provides for
estimated losses through an allowance for doubtful accounts. In evaluating the
level of established loss reserves, the Company makes judgments regarding its
customers’ ability to make required payments, economic events and other factors.
As the financial condition of these parties change, circumstances develop or
additional information becomes available, adjustments to the allowance for
doubtful accounts may be required. The Company also performs ongoing credit
evaluations of customers’ financial condition. The Company maintains reserves
for potential credit losses, and such losses traditionally have been within its
expectations.
 
 Property
and Equipment
 Property
and equipment are stated at cost, less accumulated depreciation. Depreciation is
computed using the straight-line method over the estimated useful lives of the
related assets. Machinery and equipment are depreciated over 3 to 10 years.
Furniture and fixtures are depreciated over 7 years. Equipment leased under
a capital lease is amortized over the term of that lease. The Company performs
ongoing evaluations of the estimated useful lives of the property and equipment
for depreciation purposes. The estimated useful lives are determined and
continually evaluated based on the period over which services are expected to be
rendered by the asset. Maintenance and repairs are expensed as
incurred.
 
 Impairment
of Long-Lived Assets
 In
accordance with Accounting Standards Codification 360-10, "Property, Plant and
Equipment", the Company periodically reviews its long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be fully recoverable. The Company
recognizes an impairment loss when the sum of expected undiscounted future cash
flows is less than the carrying amount of the asset. The amount of impairment is
measured as the difference between the asset’s estimated fair value and its book
value.
 
 During
the year ended February 28, 2010, the Company identified and recognized impaired
losses of $129,000 on long-lived assets.
  F-7
  Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 Website
Development Costs
 The
Company accounts for website development costs in accordance with Accounting
Standards Codification 350-50 “Website Development
Costs”.  Accordingly, all costs incurred in the planning stage are
expensed as incurred, costs incurred in the website application and
infrastructure development stage that meet specific criteria are capitalized and
costs incurred in the day to day operation of the website are expensed as
incurred.
 
 Management
placed the website into service during the fiscal year ended February 28, 2010,
subject to straight-line amortization over a three year period.
  Goodwill
and Intangible Assets
  The
Company applies Accounting Standards Codification 350-20 “Goodwill and Other”,
which established accounting and reporting requirements for goodwill and other
intangible assets. The standard requires that all intangible assets acquired
that are obtained through contractual or legal right, or are capable of being
separately sold, transferred, licensed, rented or exchanged must be recognized
as an asset apart from goodwill. Intellectual properties obtained through
acquisition, with indefinite lives, are not amortized, but are subject to an
annual assessment for impairment by applying a fair value based test.
Intellectual properties that have finite useful lives are amortized over their
useful lives. Amortization expense for the years ended February 28, 2010 and
2009 was $1,670,784 and $335,856, respectively.
  Earnings
per Share
  Earnings
per share are reported pursuant to the provisions of FASB ASC 210. Accordingly,
basic earnings per share reflects the weighted average number of shares
outstanding during the year, and diluted shares adjusts that figure by the
additional hypothetical shares that would be outstanding if all exercisable
outstanding common stock equivalents with an exercise price below the current
market value of the underlying stock were exercised. Common stock equivalents
consist of stock options and warrants. Basic earnings per share are computed by
dividing net earnings available to common shareholders by the weighted average
number of shares outstanding during the period. Diluted earnings per share are
computed assuming the exercise of stock options under the treasury stock method
and the related income taxes effects, if not anti-dilutive. For loss periods
common share equivalents are excluded from the calculation, as the effect would
be anti-dilutive.
 
 Revenue
Recognition
 
 For
advertising services, the Company recognizes revenue in the period when
advertisements are either aired or published. Revenues from advertising barter
transactions are recognized in the period during which the advertisements are
either aired or published. Expenses from barter transactions are recognized in
the period as incurred. Barter transactions are accounted for in accordance with
EITF Issue No. 99-17 “Accounting for Advertising Barter
Transactions”(ASC Topic 605-20-25), which are recorded at the fair value
of the advertising provided based on the Company’s own historical practice of
receiving cash for similar advertising from buyers unrelated to the counterparty
in the barter transactions. The barter transactions that have occurred since
launching the television network in November of 2009 are immaterial. The amounts
included in advertising services revenue and general and administrative for
barter transactions were approximately $nil and $nil for the fiscal years ended
February 28, 2010 and 2009 respectively.
  F-8
  Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 Travel:Gross travel tour revenues represent the total retail value of
transactions booked for both agency and merchant transactions recorded at the
time of booking, reflecting the total price due for travel by travelers,
including taxes, fees and other charges, and are generally reduced for
cancellations and refunds.  We also generate revenue from paid cruise
ship bookings in the form of commissions.  Commission revenue is
recognized at the date the price is fixed or determinable, the delivery is
completed, no other significant obligations of the Company exist and
collectability is reasonably assured. Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as unearned
revenue.
  Advertising:
We recognize advertising revenues in the period in which the advertisement is
displayed, provided that evidence of an arrangement exists, the fees are fixed
or determinable and collection of the resulting receivable is reasonably
assured. If fixed-fee advertising is displayed over a term greater than one
month, revenues are recognized ratably over the period as described below. The
majority of insertion orders have terms that begin and end in a quarterly
reporting period. In the cases where at the end of a quarterly reporting period
the term of an insertion order is not complete, the Company recognizes revenue
for the period by pro-rating the total arrangement fee to revenue and deferred
revenue based on a measure of proportionate performance of its obligation under
the insertion order. The Company measures proportionate performance by the
number of placements delivered and undelivered as of the reporting date. The
Company uses prices stated on its internal rate card for measuring the value of
delivered and undelivered placements. Fees for variable-fee advertising
arrangements are recognized based on the number of impressions displayed or
clicks delivered during the period.
  Under
these policies, no revenue is recognized unless persuasive evidence of an
arrangement exists, delivery has occurred, the fee is fixed or determinable, and
collection is deemed reasonably assured. The Company considers an insertion
order signed by the client or its agency to be evidence of an
arrangement.
  Cost
of Revenues
 Cost of
revenues includes costs directly attributable to services sold and delivered.
These costs include such items as broadcast carriage fees, costs to produce
television content, sales commission to business partners, hotel and airfare,
cruises and membership fees.
 
 Sales
and Marketing
 Sales and
marketing expenses consist primarily of advertising and promotional expenses,
salary expenses associated with sales and marketing staff, expenses related to
our participation in industry conferences, and public relations
expenses.  The goal of our advertising is to acquire new subscribers
for our e-mail products, increase the traffic to our Web sites, and increase
brand awareness.
  F-9
 Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 Advertising
Expense
 Advertising
costs are charged to expense as incurred and are included in selling and
promotions expense in the accompanying financial statements. Advertising expense
for the years ended February 28, 2010 and February 28, 2009 was $82,493 and
$42,335, respectively.
 
 Share Based
Compensation.The Company computes share based payments in
accordance with Accounting Standards Codification 718-10 “Compensation” (ASC
718-10). ASC 718-10 establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods and services at fair
value, focusing primarily on accounting for transactions in which an entity
obtains employees services in share-based payment transactions. It also
addresses transactions in which an entity incurs liabilities in exchange for
goods and services that are based on the fair value of an entity’s equity
instruments or that may be settled by the issuance of those equity
instruments.
 
 In March
2005 the SEC issued SAB No. 107, Share-Based Payment (“SAB 107”) which provides
guidance regarding the interaction of ASC 718-10 and certain SEC rules and
regulations. The Company has applied the provisions of SAB 107 in its adoption
of ASC 718-10.
 
 Income
Taxes
 The
Company accounts for income taxes in accordance with ASC 740, Accounting for
Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income
Taxes.  Under this method, deferred income taxes are determined based on
the estimated future tax effects of differences between the financial statement
and tax basis of assets and liabilities given the provisions of enacted tax
laws. Deferred income tax provisions and benefits are based on changes to the
assets or liabilities from year to year. In providing for deferred taxes, the
Company considers tax regulations of the jurisdictions in which the Company
operates, estimates of future taxable income, and available tax planning
strategies. If tax regulations, operating results or the ability to implement
tax-planning strategies vary, adjustments to the carrying value of deferred tax
assets and liabilities may be required. Valuation allowances are recorded
related to deferred tax assets based on the “more likely than not” criteria of
ASC 740.
 
 ASC
740-10 requires that the Company recognize the financial statement benefit of a
tax position only after determining that the relevant tax authority would more
likely than not sustain the position following an audit. For tax positions
meeting the “more-likely-than-not” threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than
50 percent likelihood of being realized upon ultimate settlement with the
relevant tax authority.
  F-10
 Next 1
Interactive, Inc. 
 Notes
to Consolidated Financial Statements
 
 Fair
Value of Financial Instruments
 The
Company adopted ASC topic 820, “Fair Value Measurements and Disclosures” (ASC
820), formerly SFAS No. 157 “Fair Value Measurements,” effective
January 1, 2009. ASC 820 defines “fair value” as the price that would be
received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. There was no
impact relating to the adoption of ASC 820 to the Company’s financial
statements.
  ASC 820
also describes three levels of inputs that may be used to measure fair
value:
  •
              Level
      1: Observable inputs that reflect unadjusted quoted prices for identical
      assets or liabilities traded in active
markets.
  •
              Level
      2: Inputs other than quoted prices included within Level 1 that are
      observable for the asset or liability, either directly or
      indirectly.
  •
              Level
      3: Inputs that are generally unobservable. These inputs may be used with
      internally developed methodologies that result in management’s best
      estimate of fair value.
  Financial
instruments consist principally of cash, accounts receivable, prepaid expenses,
accounts payable, accrued liabilities and other current liabilities. The
carrying amounts of such financial instruments in the accompanying balance
sheets approximate their fair values due to their relatively short- term nature.
The fair value of long-term debt is based on current rates at which the Company
could borrow funds with similar remaining maturities. The carrying amounts
approximate fair value. It is management’s opinion that the Company is not
exposed to any significant currency or credit risks arising from these financial
instruments.
 
 Recent
Accounting Pronouncements
 In June
2009, the FASB established the Accounting Standards Codification (“Codification”
or “ASC”) as the source of authoritative accounting principles recognized by the
FASB to be applied by nongovernmental entities in the preparation of financial
statements in accordance with generally accepted accounting principles in the
United States (“GAAP”).  Rules and interpretive releases of the
Securities and Exchange Commission (“SEC”) issued under authority of federal
securities laws are also sources of GAAP for SEC registrants. Existing GAAP was
not intended to be changed as a result of the Codification, and accordingly the
change did not impact our financial statements. The ASC does change the way the
guidance is organized and presented.
  F-11
 Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
guidance now codified as FASB ASC Topic 820, “Fair Value Measurements and
Disclosures,”which defines fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements. The
pronouncement is effective for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. In February 2008, the FASB
released additional guidance now codified under FASB ASC Topic 820, which
provides for delayed application of certain guidance related to non-financial
assets and non-financial liabilities, except for items that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually), until fiscal years beginning after November 15, 2008, and
interim periods within those years. Pursuant to the requirements of FASB ASC
Topic 820, we adopted the provisions of Topic 820 with respect to our
non-financial assets and non-financial liabilities effective April 1, 2009.
The implementation of this pronouncement had no impact on our consolidated
financial position, results of operations or cash flows.
 
 In
May 2009, the FASB issued Accounting Standards Codification No. ASC
855-10,  “Subsequent
Events” (“ASC No. 855-10”). ASC No. 855-10 establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date, but before financial statements are issued or are available
to be issued. In particular, this Statement sets forth:
 1.
              The
      period after the balance sheet date during which management of a reporting
      entity should evaluate events or transactions that may occur for potential
      recognition or disclosure in the financial
  statements
 2.
              The
      circumstances under which an entity should recognize events or
      transactions occurring after the balance sheet date in its financial
      statements
 3.
              The
      disclosures that an entity should make about events or transactions that
      occurred after the balance sheet
date.
  Although
there is new terminology, the standard is based on the same principles as those
that currently exist in the auditing standards. The standard, which
includes a new required disclosure of the date through which an entity has
evaluated subsequent events, is effective for interim or annual periods ending
after June 15, 2009. We adopted FASB ASC Topic 855 on June 30,
2009 with no material effects to the financial results of the
Company.
  In
April 2009, the FASB issued guidance now codified as FASB ASC Topic 825,
“Financial Instruments,”which amends previous Topic 825 guidance to require disclosures about
fair value of financial instruments in interim as well as annual financial
statements. This pronouncement is effective for periods ending after
June 15, 2009. The adoption of this pronouncement did not have an
impact on our consolidated financial position, results of operations or cash
flows.
  In
January 2010, the FASB amended its guidance now codified as FASB ASC Topic
505-20, “Equity – Stock Dividends and Stock Splits,” to clarify that the stock
portion of a distribution to shareholders that allows them to elect to receive
cash or stock with a limit on the amount of cash that will be distributed is not
a stock dividend for purposes of applying Topics 505 and 260. These
provisions of FASB ASC Topic 505 are effective for interim and annual periods
ending after December 15, 2009 and, accordingly, are effective for us for
the current fiscal reporting period. The adoption of this pronouncement did not
have an impact on our financial condition or results of operations as we do not
currently have distributions that allow shareholders such an
election.
  F-12
 Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 In
January 2010, the FASB amended guidance now codified as FASB ASC Topic 810,
“Consolidation.” FASB
ASC Topic 810 changes the accounting and reporting for minority interests, which
will be re-characterized as non-controlling interests and classified as a
component of equity. The amendment of FASB ASC Topic 810-10 establishes the
accounting and reporting guidance for non-controlling interests and changes in
ownership interests of a subsidiary. FASB ASC Topic 810 is effective for us
on a prospective basis for business combinations with an acquisition date
beginning in the first quarter of fiscal year 2010. The adoption of FASB
ASC Topic 810 as amended did not have an impact on our consolidated financial
statements.
  A variety
of proposed or otherwise potential accounting standards are currently under
study by standard-setting organizations and various regulatory agencies. Because
of the tentative and preliminary nature of these proposed standards, management
has not determined whether implementation of such proposed standards would be
material to our consolidated financial statements.
 
 Note
2 - Going Concern
 
 As
reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit
of $29,961,571 and a working capital deficit of $2,137,631 at February 28, 2010,
net losses for the year ended February 28, 2010 of $11,864,232 and cash used in
operations during the year ended February 28, 2010 of
$5,594,142.  While the Company is attempting to increase sales,
the growth has yet to achieve significant levels to fully support its daily
operations.
 
 Management’s
plans with regard to this going concern are as follows:  The Company
will continue to raise funds through private placements with third parties by
way of a public or private offering. In addition, the Board of Directors has
agreed to make available, to the extent possible, the necessary capital required
to allow management to aggressively expand the R&R TV Linear Network, as
well as its planned Interactive and Video on Demand solutions. Management and
Board members are working aggressively to increase the viewership of our network
by promoting it across other mediums as well as other networks which will
increase value to advertisers and result in higher advertising rates and
revenues.
 
 While the
Company believes in the viability of its strategy to improve sales volume and in
its ability to raise additional funds, there can be no assurances to that
effect. The Company's limited financial resources have prevented the Company
from aggressively advertising its products and services to achieve consumer
recognition.  The ability of the Company to continue as a going
concern is dependent on the Company’s ability to further implement its business
plan and generate greater revenues. The consolidated financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern.  Management believes that the actions
presently being taken to further implement its business plan and generate
additional revenues provide the opportunity for the Company to continue as a
going concern.
  F-13
  Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 Note
3 – Property and Equipment
 
 Property
and equipment consisted of the following at February 28:
  2010
                
                
                2009Leased
      equipment
                
                $
                -
                
                
                $
                177,754Furniture
      and equipment
                
                
                -
                
                
                
                21,069Software
                
                
                -
                
                
                
                92,557-
                
                
                
                291,380Less:
      Accumulated depreciation
                
                
                -
                
                
                
                (100,615
                )Net
      property and equipment
                
                $
                -
                
                
                $
                190,765
 The
property, plant and equipment consisted of leased equipment which is no longer
used and abandoned furniture and software acquired with the acquisition of the
Home Preview Channel. Accordingly, an impairment charge in the amount of
$129,000 was recognized during the year ended February 28, 2010.
 
 Depreciation
expense for the fiscal years ended February 28, 2010 and 2009 was $62,240 and
$110,616, respectively
 
 Note
4 – Acquisitions and Intangible Assets
 
 On August
17, 2009, Next 1 Interactive, Inc. (the “Company”) and Televisual Media Works,
LLC (“Televisual Media”) closed on an Asset Purchase Agreement (the “Agreement”)
whereby the Company purchased certain rights, trademarks and other intangible
property of Resort and Residence TV, a wholly owned subsidiary of Televisual
Media, consisting of the following:
 
 1)
              Trade
      name of the company of Resort &
Residence;
 2)
              Trademark
      of Resort & Residence;
 3)
              Domain
      names of “resortandresidence.tv”, resortandresidencechannel.net;
      resortandresidencechannel.tv and
      resortandresidencechannel.info;
 4)
              Licenses
      and permits necessary for the conduct of the business of the
      Company;
 5)
              Interactive
      application design;
 6)
              Network
      promotional video clip.
 
 The
previously listed intangibles, in conjunction with the industry contacts of the
seller, resulted in the execution of a Broadcast Services Agreement (“BSA”) with
a major satellite service provider. The achievement of this relationship in a
timely manner was critical to launching R&R TV.
  F-14
  Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 
 The cost
of the Resort and Residence TV acquisition was approximately $6.88
million, of which a $250,000 deposit was paid during the year ended
February 28, 2010. See Note 6 for discussion of future debt
payments.
 
 The
acquired assets are amortized over their contractual life or estimated useful
life. Amortization of those assets has begun during the third quarter of this
fiscal year.
 
 Pursuant
to the Agreement, the Company made a $250,000 initial payment for the assets of
Resort and Residence TV, $175,000 of which was paid at closing and the remaining
$75,000 paid October, 2009. In addition, the Company is required to pay to
Televisual Media $500,000 on the first anniversary of the closing and $750,000
plus interest accrued at 8% annually on the second anniversary of the closing.
The Company also issued a $3,000,000 zero coupon debenture (the “Debenture”) to
Televisual Media payable on June 9, 2012. The Debenture bears interest at 5% per
annum payable in full upon maturity. The Debenture also entitles Televisual
Media to receive 20% of all profits earned from the Resort and Residence TV
assets through maturity, with such proceeds being used towards the retirement of
the Debenture.
 
 In
connection with the Agreement, Televisual Media also receives $3,500,000 of
Secured Series Convertible Preferred Stock (the “Preferred Stock”) of the
Company which collateralizes the final loan payment of $3,500,000 due June 9,
2019. Accordingly, the Preferred Stock is classified as a long-term liability on
the balance sheet and has a mandatory redemption date of June 9, 2019.
Televisual Media has the right to convert the Preferred Stock into 3.5 million
common shares should the network reach a minimum of 17 million households during
the term of the Preferred Stock. The Company has the right to redeem or force
conversion of the Preferred Stock after the first year of operation of the
network.  Should the Company fail to repay the $3,500,000 loan on June
9, 2019, interest thereafter will be fixed at 1% per year until such time as the
loan is repaid or the Preferred shares are converted. The Preferred Stock is
secured by all of the assets of Resort and Residence TV.
 
 As of
February 28, 2010, the Company has not issued the Secured Series Convertible
Preferred Stock.
 
 Except
for the Agreement, there is no material relationship between the Company or its
affiliates and any of the parties to the Agreement.
 
 In August
2008, the Company paid $70,000 and issued approximately 667,000 shares of common
stock to acquire controlling shares in Brands on Demand (“BOD”). The net assets
acquired were valued at $140,000. No goodwill or intangibleassets were recognized
in connection with the transaction. Subsequent to the acquisition, due to slow
development and deployment of the website combined with a significant economic
downturn, management determined that the project was not cost effective and the
acquired entity was subsequently dissolved.
  F-15
  Next 1
Interactive, Inc. 
 Notes
to Consolidated Financial Statements
 
 On
October 29, 2008, the Company consummated the transactions contemplated by a
Purchase Agreement, dated July 15, 2008 with the stockholders of The Home
Preview Channel, Inc. (“HPC”). The Home Preview Channel was a cable television
network with Master Carriage licenses for both Comcast and Time Warner and with
distribution at the time into approximately 1.6 million homes.  The network
had a technology that was developed in conjunction with Loop Networks (see
below) that allowed for consolidation of large amounts of data while utilizing
small amounts of bandwidth. The Company saw in HPC a significant
opportunity to revamp and re-launch the network into a more current format that
could include travel and real estate while utilizing the reach to accelerate Web
and Mobile properties for the company. In addition the Company recognized the
opportunity to use the HPC carrier relationships to expand the platform for both
Linear and Video on Demand opportunities.
 
 Pursuant
to the HPC Agreement, the Company issued 677,999 shares of its common stock in
exchange for 100% of the issued and outstanding shares of HPC. The total value
of the consideration given was approximately $692,000. The Company acquired
assets with a net realizable value of approximately $166,000 and assumed
adjusted liabilities of approximately $824,000 resulting in amortizable
intangible assets of approximately $1,350,000. The assets acquired consist
primarily of broadcast services agreements and developed relationships with
cable TV carriers and are being amortized over an estimated useful life of seven
years.
 
 On
October 29, 2008, the Registrant consummated the transactions contemplated by a
Purchase Agreement with the members of Loop Networks, LLC (“Loop”). Loop
Networks is a technology company that owns the Detroit HPC charter agreement.
Loop oversaw the development of the HPC operating technology as well as certain
proprietary automated systems that can be used to expand on-demand capabilities
for the Home Preview Channel.  This technology allows for images and data
to be broken down, moved over the internet and reformatted as video at the
television distribution point, which the Company sees as essential in allowing
the TV network to amass and store large amounts of data (i.e. the potential to
process 8 million real estate listings) and deliver them to the consumer on
demand, thereby conserving significant bandwidth.
 
 Pursuant
to the Loop Agreement, the Company issued 5,345,000 shares of its common stock
in exchange for 100% of the issued and outstanding membership interests of Loop.
The total value of the consideration given was approximately $5,450,000. The
Company acquired assets with a net realizable value of approximately $5,000 and
assumed liabilities of approximately $300,000 resulting in intangible assets of
approximately $5,650,000. The assets acquired consist primarily of the exclusive
use of technology required to provide video-on-demand and interactive TV
capabilities and are being amortized over an estimated useful life of seven
years.
 
 The
following table sets forth intangible assets, both acquired and developed,
including accumulated amortization:
  F-16
 Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 February 28, 2010Remaining
                                                  
                                                  
                                                  
                                                  
                                                  Accumulated
                                                  
                                                  
                                                  Net CarryingUseful Life
                                                  
                                                  Cost
                                                  
                                                  
                                                  Amortization
                                                  
                                                  
                                                  ValueSupplier
      Relationships
                                                  
                                                  6.1
      years
                                                  
                                                  $
                                                  7,938,935
                                                  
                                                  
                                                  $
                                                  727,681
                                                  
                                                  
                                                  $
                                                  7,211,254Technology
                                                  
                                                  5.7
      years
                                                  
                                                  
                                                  5,703,829
                                                  
                                                  
                                                  
                                                  1,086,444
                                                  
                                                  
                                                  
                                                  4,617,385Web
      Site
                                                  
                                                  2.0
      years
                                                  
                                                  
                                                  514,999
                                                  
                                                  
                                                  
                                                  171,666
                                                  
                                                  
                                                  
                                                  343,333Trade Name
                                                  
                                                  6.5 years
                                                  
                                                  
                                                  291,859
                                                  
                                                  
                                                  
                                                  20,847
                                                  
                                                  
                                                  
                                                  271,012$
                                                  14,449,622
                                                  
                                                  
                                                  $
                                                  2,006,638
                                                  
                                                  
                                                  $
                                                  12,442,984
  February 28, 2009Remaining
                                                  
                                                  
                                                  
                                                  
                                                  Accumulated
                                                  
                                                  
                                                  Net CarryingUseful Life
                                                  
                                                  Cost
                                                  
                                                  
                                                  Amortization
                                                  
                                                  
                                                  ValueSupplier
      Relationships
                                                  
                                                  6.7
      years
                                                  
                                                  $
                                                  1,349,135
                                                  
                                                  
                                                  $
                                                  64,245
                                                  
                                                  
                                                  $
                                                  1,284,890Technology
                                                  
                                                  6.7
      years
                                                  
                                                  
                                                  5,703,829
                                                  
                                                  
                                                  
                                                  271,611
                                                  
                                                  
                                                  
                                                  5,432,218Web Site
                                                  
                                                  3.0 years
                                                  
                                                  
                                                  514,999
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  514,999$
                                                  7,567,963
                                                  
                                                  
                                                  $
                                                  335,856
                                                  
                                                  
                                                  $
                                                  7,232,107
  Intangible
assets are amortized on a straight-line basis over their expected useful lives,
estimated to be 7 years, except for the web site which is 3 years. Amortization
expense related to intangible assets was $1,670,782 for the year ended February
28, 2010.
 
 Note
5 - Accounts Payable and Accrued Expenses
  Accounts
payable and accrued expenses consist of the following at February
28:
  2010
                    
                    
                    2009Trade
      accounts payable
                    
                    $
                    779,778
                    
                    
                    $
                    695,380Accrued
      interest
                    
                    
                    319,938
                    
                    
                    
                    56,724Deferred
      salary
                    
                    
                    178,450
                    
                    
                    
                    153,262Accrued
      expenses – other
                    
                    
                    151,425
                    
                    
                    
                    63,086Totals
                    
                    $
                    1,429,591
                    
                    
                    $
                    968,452
 
 Note
6 – Notes Payable
 
 On August
17, 2009, Next 1 Interactive, Inc. (the “Company”) and Televisual Media Works,
LLC (“Televisual Media”) closed on an Asset Purchase Agreement (the “Agreement”)
whereby the Company purchased certain rights, trademarks and other intangible
property of Resort and Residence TV, a wholly owned subsidiary of Televisual
Media. (See Note 4).
  F-17
 Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 
 Pursuant
to the Agreement, the Company made a $250,000 initial payment for the assets of
Resort and Residence TV, $175,000 of which was paid at closing and the remaining
$75,000 paid October, 2009. In addition, the Company is required to pay to
Televisual Media $500,000 on the first anniversary of the closing and $750,000
plus interest accrued at 8% annually on the second anniversary of the closing.
The Company also issued a $3,000,000 zero coupon debenture (the “Debenture”) to
Televisual Media payable on June 9, 2012. The Debenture bears interest at 5% per
annum payable in full upon maturity. The Debenture also entitles Televisual
Media to receive 20% of all profits earned from the Resort and Residence TV
assets through maturity, with such proceeds being used towards the retirement of
the Debenture.
 
 In
connection with the Agreement, Televisual Media also receives $3,500,000 of
Secured Series Convertible Preferred Stock (the “Preferred Stock”) of the
Company which collateralizes the final loan payment of $3,500,000 due June 9,
2019. Accordingly, the Preferred Stock is classified as a long-term liability
included in notes payable in the accompanying balance sheet, discounted to
approximately $2,419,000 due to the present value effect of imputed
interest. The preferred stock has a mandatory redemption date of June 9,
2019. Televisual Media has the right to convert the Preferred Stock into 3.5
million common shares should the network reach a minimum of 17 million
households during the term of the Preferred Stock. The Company has the right to
redeem or force conversion of the Preferred Stock after the first year of
operation of the network.  Should the Company fail to repay the
$3,500,000 loan on June 9, 2019, interest thereafter will be fixed at 1% per
year until such time as the loan is repaid or the Preferred shares are
converted. The Preferred Stock is secured by all of the assets of Resort and
Residence TV.
 
 As of
February 28, 2010, the Company has not issued the Secured Series Convertible
Preferred Stock.
 
 Except
for the Agreement, there is no material relationship between the Company or its
affiliates and any of the parties to the Agreement.
 
 On July
31, 2009, the Company entered in to an agreement with an investment services
provider (“provider”) to raise $500,000 in debt funding whereby the Company
provided 500,000 shares (1 share for each dollar of debt raised) of S-8
free-trading shares as collateral. The agreement provided that in the event the
share price dropped below a predetermined loan-to-value level, additional
collateral would be required. The provider was able to raise only $99,000. Due
to the decrease in the stock price, the provider retained 162,233 shares in
exchange for the funds delivered and returned 337,767 shares to the
Company.
  F-18
  Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 
 The
Company has a note payable with an unrelated third party for $500,000. The note
bears interest at 7% per year and matures in March 2011 payable in quarterly
installments of $25,000. The balance of the note was approximately $309,000 at
February 28, 2010.
 
 In
February 2009, the Company restructured note agreements with three existing
note-holders. The collective balance at the time of the restructuring was
$250,000 plus accrued interest payable of $158,000 which was consolidated into
three new notes payable totaling $408,000. The notes bear interest at 10% per
year and mature on May 31, 2010 at which time the total amount of principle and
accrued interest is due.
 
 In
connection with the restructure of these notes the Company issued 150,000
detachable warrants to purchase common stock at an exercise price of $3.00 per
share. The warrant issuance was recorded as a discount and is amortized monthly
over the term of the note. Approximately $36,000 of the remaining discount is
included in prepaid expenses and other current assets. At February 28,
2010, approximately $145,000 was amortized as interest expense for the
fiscal year ended February 28, 2010.
 
 In
connection with the acquisition of Brands on Demand, a five year lease agreement
was entered into by an officer of the company.  Subsequent to terminating
the officer, the Company entered into an early termination agreement with the
Lessor in the amount of $30,000 secured by a promissory note to be paid in
monthly installments of $2,500. As of February 28, 2010, the Company has not
made any installment payments on this obligation
 
 Required
principal payment obligations attributable to the foregoing are tabulated
below:
 
 Year
      ending February 28,2011
                      
                      $
                      900,9632012
                      
                      
                      1,059,0372013
      and later
                      
                      
                      5,418,482Total
                      
                      $
                      7,378,482
 
 Interest
expense on the notes payable was $408,000 and $59,000 for the fiscal year ended
February 28, 2010 and 2009, respectively.
 
 Note
7 – Capital Lease Payable
  The
Company leases certain telephone and communications equipment through a lease
agreement with a related party. The lease requires monthly payments of $5,078
including interest at approximately 18% per year. The lease expires on June 30,
2011.
  F-19
 Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 
 The
following is a schedule by years of future minimum payments required under the
lease together with their present value as of February 28, 2010.
  Year Ending February 28:
                  
                  2010
                  
                  
                  20092010
                  
                  $
                  -
                  
                  
                  $
                  60,9452011
                  
                  
                  60,945
                  
                  
                  
                  60,9452012
                  
                  
                  20,313
                  
                  
                  
                  20,313Total
      minimum lease payments
                  
                  
                  81,258
                  
                  
                  
                  142,203Less
      amount representing interest
                  
                  
                  9,778
                  
                  
                  
                  27,570Present
      value of minimum lease payments
                  
                  
                  71,480
                  
                  
                  
                  114,633Less:
      current portion
                  
                  
                  51,928
                  
                  
                  
                  43,163Long-term
      portion
                  
                  $
                  19,552
                  
                  
                  $
                  71,470
 
 Interest
expense paid on the capital lease was $18,000 and $19,000 during the fiscal
years ended February 28, 2010 and February 28, 2009, respectively.
 
 Note 8– Related Party
Transactions
 
 On March
5, 2010, the Company entered into a promissory note with a director (“holder”)
of the Company.  Pursuant to the note, the holder has agreed to loan
the Company $3,500,000. The note has an effective date of January 25, 2010 and a
maturity date of January 25, 2011. The note bears interest at 6% per
annum. The holder will advance the funds under the terms of the note in
tranches through April 15, 2010.  The balance of the note payable is
$1,492,346 at February 28, 2010.
 
 As
consideration for the loan, the Company issued 7,000,000 warrants to the
holder with a three-year life and a fair value of $2.3 million to purchase
shares of the Company’s common stock, $0.00001 par value, per share, at an
exercise price of $1.00 per share.
 
 The fair
value of the warrants was estimated at the date of grant using the Black-Scholes
option-pricing model with the following assumptions:
 
 Risk-free
      interest rate
                  
                  
                  1.46
                  %Dividend
      yield
                  
                  
                  0
                  %Volatility
      factor
                  
                  
                  136.1
                  %Expected
      life
                  
                  1.5
      years
  F-20
  Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 
 The fair
value of warrants is amortized as finance fees over the term of the loan. The
Company recorded approximately $2.283 million in prepaid finance fees upon
origination and amortized approximately $219,000 in expense during the year. In
addition, interest expense in the amount of $5,000 was recorded on the note for
fiscal 2010.
 
 The
Company had six convertible notes payable with shareholders totalling $400,000
of which $100,000 was converted to equity and $300,000 is currently due. The
notes have terms ranging from 14 to 27 days and are convertible at the option of
the note holder to units consisting of one common share and from 1 to 2 warrants
with exercise prices ranging from $1.00 to $2.00 and terms ranging from 1 to 3
years. The notes are secured by the Company’s accounts receivable. Warrants with
a fair value in the amount of $114,000 were issued as a one-time interest
payment on the loans representing an equivalent average annualized rate of
interest of 1,775%.
 
 The fair
value of the warrants was estimated at the date of grant using the Black-Scholes
option-pricing model with the following range of assumptions:
 
 Risk-free
      interest rate
                    
                    
                    0.47%-1.57
                    %Dividend
      yield
                    
                    
                    0
                    %Volatility
      factor
                    
                    
                    138.9%-140.3
                    %Expected
      life
                    
                    0.5-1.5
      years
 
 The
Company considered whether these convertible notes should have been accounted
for pursuant to ASC 470, Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratio (formerly EITF Issue No. 98-5), and ASC 470, Application of EITF Issue No. 98-5
to Certain Convertible Instruments (formerly EITF Issue No. 00-27).
Pursuant to the terms of these subordinated convertible notes, no beneficial
conversion feature was recorded.
 
 The
Company has notes payable with a director and officer for approximately
$51,000.      The loans bear interest at 18%
compounded daily and have no stated maturity date. Interest expense on the loans
was approximately $37,000 and $20,000 for the years ended February 28, 2010 and
February 28, 2009 respectively.
 
 The
Company has a loan payable with a director and officer for approximately
$10,000. The loan bears interest at 4% per annum and has no stated maturity
date. Interest expense on the loan was approximately $400 and $nil for the years
ended February 28, 2010 and February 28, 2009 respectively.
 
 The
Company also has a loan payable to an existing shareholder for approximately
$30,000. The loan bears interest at 10% per year and has no stated maturity
date. Interest expense recorded on the loan for fiscal 2010 was approximately
$4,000.
  F-21
 Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 
 The
Company also has a loan payable to an existing shareholder for approximately
$17,000. The loan bears interest at 4% per year and has no stated maturity date.
Interest expense recorded on the loan for fiscal 2010 was approximately
$1,000.
 
 The
Company executed two agreements with a family member of an executive who is the
guarantor of a merchant account required to process credit card transactions.
The fee per the agreements is $2,100 per month. The first agreement is
retroactive to when the merchant account began processing transactions in April
of 2007. As a result, the Company has recorded an accrued expense in the amount
of $73,500 at February 28, 2010. The second agreement provides for the same
monthly fee in the amount of $2,100 for a term of 3 years beginning April,
2010.
 
 From time
to time the Company has used the services of a law firm for which a relative
works and that activity was insignificant.
 
 As
discussed in Note 7, the Company leases equipment under a capital lease from an
existing shareholder.
 
 Note 9– Stockholders’
Equity
 
 Pursuant
to a Stock Purchase Agreement, dated September 24, 2008, a 90.7% stockholder of
Maximus sold 5,000,000 shares of Maximus common stock, representing 100% of his
shares, to EXVG for an aggregate purchase price of $200,000. EXVG then reissued
the 5,000,000 Maximus common shares to the management of EXVG in exchange for
the cancellation of their existing preferred and common stock of
EXVG.
 
 As a
result of the reverse merger and resulting share exchange agreement, the
outstanding EXVG
exchanged 100% of its shares in EXVG (the “EXVG Shares”) for 13 million shares
of common stock of Maximus (the “Share Exchange”), resulting in EXVG becoming
the majority shareholder of Maximus. EXVG then proceeded to distribute the 13
million shares of Maximus common stock to the stockholders of EXVG (“EXVG
Stockholders”) and the management of EXVG on a pro rata basis. As a result of
these transactions, EXVG became a wholly-owned subsidiary of
Maximus.
 
 The Share
Exchange provides for the exchange rate of 1 share of Maximus common stock for
60 shares Extraordinary Vacations USA common stock. Upon execution of the Share
Exchange, approximately 786,000,000 outstanding shares of EXVG common stock were
converted to 13,000,000 shares of Maximus, with stockholders afforded all the
rights and privileges therein. The financial statements of Next 1, Interactive,
Inc. reflect the retroactive effect of the Share Exchange as if it had occurred
at the beginning of the reporting period. All per loss per share amounts are
reflected based on Next 1 shares outstanding, basic and
dilutive.
  F-22
  Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 
 On
October 9, 2008, Maximus amended its Certificate of Incorporation to change its
name to Next 1 Interactive, Inc. authorizing the issuance of up to 200,000,000
shares of common stock with a par value of $0.00001 per share and creating
100,000,000 shares of blank check preferred stock with a par value of $0.00001
per share. In addition the amendment authorizes the establishment of 3,000,000
Series A 10% cumulative convertible preferred stock out of the authorized blank
check preferred stock. Series A preferred stockholders are entitled to 100 votes
on stockholder matters for each share of preferred stock held.
 
 Preferred
Stock
  The
aggregate number of shares of Preferred Stock that the Corporation will have
authority to issue is One Hundred Million (100,000,000), with a par value of
$0.00001 per share.
  The
Preferred Stock may be divided into and issued in series. The Board of Directors
of the Corporation is authorized to divide the authorized shares of Preferred
Stock into one or more series, each of which shall be so designated as to
distinguish the shares thereof from the shares of all other series and classes.
The Board of Directors of the Corporation is authorized, within any limitations
prescribed by law and this Article, to fix and determine the designations,
rights, qualifications, preferences, limitations and terms of the shares of any
series of Preferred Stock.
  The
Company has authorized 3,000,000 shares of Series A 10% Cumulative Convertible
Preferred Stock (the “Series A Preferred Stock”). The holders of record of
shares of Series A Preferred Stock shall be entitled to vote on all matters
submitted to a vote of the shareholders of  the Corporation and shall
be entitled to one hundred (100) votes for each share of Series A Preferred
Stock. Preferred stockholders may elect to convert all or any part of such
holder’s shares of Series A Preferred Stock into Common Stock at a conversion
rate of the lower of (a) $0.50 per share or (b) at the lowest price the Company
has issued stock as part of a financing after January 1, 2006 up to the date of
such conversion.
 
 In the
event of any liquidation, dissolution or winding up of this Corporation, either
voluntary or involuntary (any of the foregoing, a “liquidation”), holders of
Series A Preferred Stock shall be entitled to receive, prior and in preference
to any distribution of any of the assets of this Corporation to the holders of
the Common Stock or any other series of Preferred Stock by reason of their
ownership thereof an amount per share equal to $1.00 for each share (as adjusted
for any stock dividends, combinations or splits with respect to such shares) of
Series A Preferred Stock held by each such holder, plus the amount of accrued
and unpaid dividends thereon (whether or not declared) from the beginning of the
dividend period in which the liquidation occurred to the date of
liquidation.
 
 During
November, 2009, 293,862 shares of the Series A preferred stock were exchanged
for 587,724 common shares.
  F-23
  Next 1
Interactive, Inc. 
 Notes
to Consolidated Financial Statements
 
 On
October 14, 2008, the Company issued 504,763 shares of Series A preferred stock
to a director and officer of the Company in connection with a share exchange for
shares of Series C Preferred stock.
 
 In
August, 2009, the Company issued 368,862 shares of Series A preferred stock
valued at $368,862 to executives in exchange for deferred salary and accrued
interest on loans.
 
 The
Company has authorized 3,000,000 shares of Series B 10% Cumulative Convertible
Preferred Stock consisting of 3,000,000 shares (the “Series B Preferred Stock”).
The holders of record of shares of Series B Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the shareholders of  the
Corporation and shall be entitled to one hundred (400) votes for each share of
Series B Preferred Stock. Preferred stockholders may elect to convert all or any
part of such holder’s shares into Common Stock at a conversion formula of the
greater of (i.e. whichever formula yields the greater number of shares of Common
Stock upon conversion): (1) twelve and one-half (12.5) shares of Common Stock
for each share of Series B Preferred Stock converted  or (2) the
number of shares of Series B Preferred Stock being converted multiplied by a
fraction, the numerator of which is $1.00 and the denominator of which is 80% of
the lower of (a) the lowest price at which the Company issued a share of Common
Stock on or after January 1, 2006 up to the date of such conversion or (b) the
lowest market price of a share of Common Stock up to the date of such
conversion.
 
 In the
event of any liquidation, dissolution or winding up of this Corporation, either
voluntary or involuntary (any of the foregoing, a “liquidation”), holders of
Series B Preferred Stock shall be entitled to receive, prior and in preference
to any distribution of any of the assets of this Corporation to the holders of
the Common Stock or any other series of Preferred Stock by reason of their
ownership thereof an amount per share equal to $1.00 for each share (as adjusted
for any stock dividends, combinations or splits with respect to such shares) of
Series B Preferred Stock held by each such holder, plus the amount of accrued
and unpaid dividends thereon (whether or not declared) from the beginning of the
dividend period in which the liquidation occurred to the date of
liquidation.
 
 There
were no Series B Preferred shares issued and outstanding at February 28,
2010.
 
 The
Company has authorized 1,750,000 shares of Series C Senior Preferred Stock
(“Series C Preferred Stock”). Each share of Series C Preferred Stock is
convertible into one hundred (100) shares of the Company’s Common Stock. Holders
of the Series C Preferred Stock shall be entitled to NO votes for each
share of Series C Preferred Stock held.
 
 There
were no Series C Preferred shares issued and outstanding at February 28,
2010.
  F-24
  Next 1
Interactive, Inc. 
 Notes
to Consolidated Financial Statements
 Common
Stock
 In
connection with the reverse merger with Maximus and recapitalization of the
Company’s equity, the Company exchanged all of the outstanding shares of
Extraordinary Vacations Group for Next One shares at a ratio of 60 to 1 to the
existing EXVG shareholders resulting in 13,000,000 shares of Next 1 common stock
issued. Also in connection with this transaction, certain officers and directors
exchanged approximately 1.5 million shares of Series B preferred stock for
5,000,000 shares of Next One common stock.
 
 During
the year ended February 28, 2010, the Company issued 2,285,000 units consisting
of 1 share of common stock and 1 warrant with an exercise price of $2.00 and
three year life, in exchange for cash of $2,285,000. In addition, the Company
issued 285,000 units consisting of 1 share of common stock and 2 warrants with
an exercise price of $3.00 and three year life, for $570,000. The Company also
issued 1,111,000 shares of common stock in exchange for cash of
$940,000.
 
 During
the year ended February 28, 2010, the company issued approximately 1,839,000
shares of common stock in exchange for services rendered valued at approximately
$2,790,000. The value of the common stock issued was based on the fair value of
the stock at the time of issuance or the fair value of the services provided,
whichever was more readily determinable.
 
 During
the year ended February 28, 2010, the company issued approximately 786,000
shares, consisting primarily of units which include 1 share of common stock and
1 warrant with an exercise price valued at approximately $715,000 for conversion
of notes payable and interest due.
 
 During
the year ended February 28, 2010, the company issued approximately 62,000 shares
of common stock in exchange for settlement of accounts payable and accrued
expenses valued at approximately $69,000. The value of the common stock issued
was based on the fair value of the stock at the time of issuance.
 
 During
November, 2009, an executive director of the company converted 293,862 shares of
the Series A preferred stock for 587,724 shares of common stock.
 
 During
the year ended February 28, 2010, the company issued approximately 578,000
shares of common stock in exchange for EXVG stock sold in the prior year. See
previous discussion of the Share Exchange at the beginning of this note on
Stockholders’ Equity.
 
 During
the year ended February 28, 2010, the Company issued approximately 1,700,000
shares of common stock in connection with the valuation of certain video assets
currently televised on the R&R TV network and the Maupintour trade name not
previously recognized in the initial reverse merger transaction with Maximus.
Management engaged an independent appraiser to assist in the valuation of these
assets resulting in an appraised value of approximately $1,700,000. See 10-K
discussion of organizational history regarding the reverse merger transaction.
Since these assets were not previously recognized on the books of EXVG or EVUSA,
no value was recorded in the financial statements reported
herein.
  F-25
 
 Next 1
Interactive, Inc. 
 Notes
to Consolidated Financial Statements
 
 As
discussed in Note 4, in August 2008, the Company issued 664,000 shares of EXVG
common stock in connection with the acquisition of Brands on Demand, an internet
marketing company. The Company also issued 167,000 shares of common stock to a
major shareholder of Brands on Demand for consulting services associated with
the acquisition. As a result of the dissolution of Brands on Demand, an
executive director of the Company was terminated and 667,000 shares of common
stock were cancelled during the year ended February 28, 2010.
 
 In
addition, during the year ended February 28, 2010, approximately 294,000 common
shares, which represented the unearned portion of shares issued to another
Company executive, were cancelled. Another 172,000 common shares were cancelled,
primarily from employees forfeiting their shares which were subsequently
reissued.
 
 In August
2008, the Company converted 1,502,000 shares of EXVG Series C preferred stock,
representing the total number of outstanding Preferred Series C shares, into
approximately 2,500,000 shares of common stock.
 
 As
discussed further in Note 4, in October 2008, the Company issued approximately
6,000,000 shares of Next 1 common stock in connection with the acquisitions of
Home Preview Channel and Loop Networks, LLC. The fair value of the Next 1 shares
issued on the date of the closing of the acquisition was $1.02.
 
 In
December 2008, the Company issued 66,667 shares of Next 1 common stock in
exchange for $200,000.
 
 Warrants
 
 During
the year ended February 28, 2010, the company issued 7,837,862 warrants valued
at approximately $2,544,142 in exchange for services rendered, consisting
primarily of financing fees incurred in raising capital.
 
 During
the year ended February 28, 2010, the company issued 427,000 warrants valued at
approximately $124,000 as interest on related-party debt.
 
 The fair
value of the warrants was estimated at the date of grant using the Black-Scholes
option-pricing model with the following assumptions:
 
 Risk-free
      interest rate
                    
                    
                    1.12%-1.66
                    %Dividend
      yield
                    
                    
                    0
                    %Volatility
      factor
                    
                    
                    101.0%-140.9
                    %Expected
      life
                    
                    1.5-2.5
      years
  F-26
 
 Next 1
Interactive, Inc. 
 Notes
to Consolidated Financial Statements
 
 In
connection with the restructure and reissuance of certain notes payable, the
Company granted 150,000 warrants to purchase Next One common stock at an
exercise price of $3.00 per share as further discussed in Note 6. The warrants
expire on March 31, 2012.
 
 At
February 28, 2010 there were 11,704,862 warrants outstanding with a weighted
average exercise price of $1.35 and weighted average life of 2.9 years. No
warrants were exercised during fiscal 2010.
 
 Note
10 – Income Taxes
 
 The
provision for income taxes consists of the following components for the years
ended February 28, 2010 and 2009:
 
 2010
                    
                    
                    2009Current
                    
                    $
                    -
                    
                    
                    $
                    -Deferred
                    
                    
                    -
                    
                    
                    
                    -$
                    -
                    
                    
                    $
                    -
 
 The
components of deferred income tax assets and liabilities are as
follows:
 
 February
      28,
                                          
                                          
                                          February
      28,2010
                                          
                                          
                                          2009Long-term
      deferred tax assets:Stock
      compensation benefit
                                          
                                          $
                                          1,847,854
                                          
                                          
                                          $
                                          1,539,069Net
      operating loss carryforward
                                          
                                          
                                          7,099,627
                                          
                                          
                                          
                                          4,795,000Total
      long-term deferred tax assets
                                          
                                          
                                          8,947,481
                                          
                                          
                                          
                                          6,334,069Valuation
      allowance
                                          
                                          
                                          (8,947,481
                                          )
                                          
                                          
                                          (6,334,069
                                          )$
                                          -
                                          
                                          
                                          $
                                          -
 
 The
income tax provision differs from the expense that would result from applying
statutory rates to income before income taxes principally because of the
valuation allowance on net deferred tax assets for which realization is
uncertain.
  F-27
  Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 The
effective tax rates for 2010 and 2009 were computed by applying the federal and
state statutory corporate tax rates as follows:
 
 2010
                          
                          
                          2009Statutory
      Federal income tax rate
                          
                          
                          35
                          %
                          
                          
                          35
                          %Less
      valuation allowance
                          
                          
                          -35
                          %
                          
                          
                          -35
                          %0
                          %
                          
                          
                          0
                          %
  F-28
 
 Next 1
Interactive, Inc. 
 Notes
to Consolidated Financial Statements
 
 Changes
in deferred tax valuation allowances are as follows:
 
 Fiscal Year Ended
                                                February 28, 2010
                                              
                                              
                                              Fiscal Year Ended
                                                February 28, 2009Balance
      at beginning of period
                                              
                                              $
                                              6,334,069
                                              
                                              
                                              $
                                              3,622,000Increase
      in valuation allowance
                                              
                                              
                                              2,613,412
                                              
                                              
                                              
                                              2,712,069Balance
      at end of period
                                              
                                              $
                                              8,947,481
                                              
                                              
                                              $
                                              6,334,069
 
 The net
operating loss (“NOL”) carryforward balance as of February 28, 2010 was
$20,300,000, expiring between 2010 and 2029. Management has reviewed the
provisions of ASC 740 regarding assessment of their valuation allowance on
deferred tax assets and based on that criteria determined that it does not have
sufficient taxable income to offset those assets.  Therefore,
Management has assessed the realization of the deferred tax assets and has
determined that it is more likely than not that they will not be realized and
has provided a full valuation allowance against these assets.
 
 The
Company adopted the provisions of ASC 740, previously FASB Interpretation No. 48
(FIN 48), Accounting for
Uncertainty in Income Taxes, on January 1, 2007. Previously the Company
has accounted for tax contingencies in accordance with Statement of Financial
Accounting Standards 5, Accounting for Contingencies. The statute of limitations
is still open on years 2006 and subsequent. The Company recognizes the financial
statement impact of a tax position only after determining that the relevant tax
authority would more likely than not sustain the position following an audit.
For tax positions meeting the more-likely-than–not threshold, the amount
recognized in the financial statements is the largest benefit that has a greater
than 50 percent likelihood of being realized upon ultimate settlement with the
relevant tax authority. At the adoption date the Company applied ASC 740 to all
tax positions for which the statute of limitations remained open. As a result of
the implementation of ASC 740, the Company did not recognize a material increase
in the liability for uncertain tax positions.
  The
Company is subject to income taxes in the U.S. federal jurisdiction and the
state of Florida. The tax regulations within each jurisdiction are subject to
interpretation of related tax laws and regulations and require significant
judgment to apply. With few exceptions, the Company is no longer subject to U.S.
federal, state and local examinations by tax authorities for the years before
2006.
 
 Note
11 - Commitments and Contingencies
 
 The
Company currently has agreements in place with a major satellite provider to
carry the R&R TV network. The agreement become effective in November 2009
and is for a term of three years. It requires the Company to pay carriage fees
of approximately $125,000 per week in year one, $127,000 per week in year two
and $147,000 per week in year three. The Company is heavily reliant on this
provider in order to continue broadcasting and if this commitment is not met it
could seriously impede the Company’s ability to generate
revenues.
  F-29
 
 Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 
 In
addition, the Company has agreements in place with a cable provider for various
linear and video-on-demand (“VOD”) services. The agreement requires that the
Company pay monthly carriage fees ranging from $150,000 to
$300,000.
 
 The
Company also has agreements in place with service providers which are primarily
the cost of processing media for the network. These agreements vary in length
but pose a future commitment on the part of the Company
  The
Company currently leases office space for its headquarters located in Weston,
Florida under an operating lease. The lease calls for monthly payments of
approximately $14,000, including electricity and common charges and expires on
December 31, 2010. Rent expense for the years ended February 28, 2010 and
February 28, 2009 was $164,000 and $230,000.
  The
following schedule represents obligations under written commitments on the part
of the Company that are not included in liabilities:
 
 Current
                      
                      
                      Long-TermFY2011
                      
                      
                      FY2012
                      
                      
                      FY 2013
                      
                      
                      TotalsCarriage
      Fees
                      
                      $
                      8,879,000
                      
                      
                      $
                      10,354,000
                      
                      
                      $
                      8,021,000
                      
                      
                      $
                      27,254,000Service
      Providers
                      
                      
                      147,000
                      
                      
                      
                      36,000
                      
                      
                      
                      
                      
                      
                      
                      183,000Leases
                      
                      
                      172,000
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      172,000Totals
                      
                      $
                      9,198,000
                      
                      
                      $
                      10,390,000
                      
                      
                      $
                      8,021,000
                      
                      
                      $
                      27,609,000
 
 Legal
Matters
 We are
otherwise involved, from time to time, in litigation, other legal claims and
proceedings involving matters associated with or incidental to our business,
including, among other things, matters involving breach of contract claims,
intellectual property and other related claims employment issues, and vendor
matters We believe that the resolution of currently pending matters will not
individually or in the aggregate have a material adverse effect on our financial
condition or results of operations. However, our assessment of the current
litigation or other legal claims could change in light of the discovery of facts
not presently known to us or determinations by judges, juries or other finders
of fact which are not in accord with management’s evaluation of the possible
liability or outcome of such litigation or claims.
  F-30
 
 Next 1
Interactive, Inc. 
 Notes
to Consolidated Financial Statements
 
 There is
currently a case pending whereby the Company’s Chief Executive Officer
(“defendant”) is being sued for allegedly breaching a contract which he signed
in his role as CEO of Extraordinary Vacations Group, Inc. The case is being
strongly contested. The defendant’s motion to dismiss plaintiff’s amended
complaint with prejudice has been argued before the judge in the case. We are
awaiting a ruling at this time.
 
 Other Matters
 In
December 2005, the Company acquired Maupintour LLC On March 1, 2007. The Company
sold Maupintour LLC to an unrelated third party for the sum of $1.00 and the
assumption of $900,000 of Maupintour debts. In October 2007 the Company was
advised that purchaser had been unable to raise the required capital it had
agreed to under the negotiated purchase agreement and was exercising its right
to rescind the purchase. Extraordinary Vacations agreed to fund all passengers
travel and moved to wind down the corporation. As part of the wind down of
Maupintour LLC, the Company created Maupintour Extraordinary Vacations, Inc. on
December 14, 2007 under which certain assets and liabilities of Maupintour LLC
were assumed in order to allow for customer travel and certain past obligations
of Maupintour LLC to be met. Management estimates that there is approximately
$420,000 in potential liabilities as a result of this matter and has recorded an
accrual in other current liabilities at February 28, 2010.
 
 As of
February 28, 2010, management believes that very few of the contingent
liabilities will be realized.
 
 Note 12– Segment Reporting
 
 Accounting
Standards Codification 280-16 “Segment Reporting”, established standards for
reporting information about operating segments in annual financial statements
and required selected information about operating segments in interim financial
reports issued to stockholders.  It also established standards for related
disclosures about products, services, and geographic areas.  Operating
segments are defined as components of the enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker, or decision making group, in deciding how to allocate
resources and in assessing performance.
 
 The
Company has two reportable operating segments: Media and Travel. The accounting
policies of each segment are the same as those described in the summary of
significant accounting policies. Each segment has its own product manager but
the overall operations are managed and evaluated by the Company’s chief
operating decision makers for the purpose of allocating the Company’s resources.
The Company also has a corporate headquarters function which does not meet the
criteria of a reportable operating segment. Interest expense and corporate
expenses are not allocated to the operating segments.
 
 The
tables below present information about reportable segments for the years ended
February 28, 2010 and February 28, 2009:
  F-31
 
 Next
1 Interactive, Inc.
  Notes
to Consolidated Financial Statements
 
 2/28/2010
                    
                    
                    2/29/2009RevenuesMedia
                    
                    $
                    595,491
                    
                    
                    $
                    613,017Travel
                    
                    
                    724,734
                    
                    
                    
                    2,142,591Consolidated
      revenues
                    
                    $
                    1,320,225
                    
                    
                    $
                    2,755,608
 
 2/28/2010
                        
                        
                        2/29/2009Operating
      ExpenseMedia
                        
                        $
                        3,125,820
                        
                        
                        $
                        1,873,186Travel
                        
                        
                        342,556
                        
                        
                        
                        650,920Segment
      expense
                        
                        
                        3,468,376
                        
                        
                        
                        2,524,106Corporate
                        
                        
                        3,759,302
                        
                        
                        
                        1,326,107Consolidated
      operating expense
                        
                        $
                        7,227,677
                        
                        
                        $
                        3,850,213Depreciation
      and amortizationMedia
                        
                        $
                        35,064
                        
                        
                        $
                        33,284Travel
                        
                        
                        39,480
                        
                        
                        
                        67,332Segment
      total
                        
                        
                        74,544
                        
                        
                        
                        100,616Corporate
                        
                        
                        1,653,348
                        
                        
                        
                        335,855Consolidated
      depreciation and amortization
                        
                        $
                        1,727,892
                        
                        
                        $
                        436,471
 
 The table
below shows information regarding segment assets:
 
 2/28/2010
                    
                    
                    2/29/2009Segment
      AssetsMedia
                    
                    $
                    15,229,701
                    
                    
                    $
                    7,347,670Travel
                    
                    
                    176,044
                    
                    
                    
                    363,389Segment
      total
                    
                    
                    15,405,745
                    
                    
                    
                    7,711,059Corporate
                    
                    
                    -
                    
                    
                    
                    181,378Total
      Assets
                    
                    $
                    15,405,745
                    
                    
                    $
                    7,892,437
 
 The
Company did not generate any revenue outside the United States for the years
ended February 28, 2010 and February 29, 2009, and the Company did not have any
assets located outside the United States.
  F-32
 
 Next 1
Interactive, Inc. 
 Notes
to Consolidated Financial Statements
 
 Note 13– Subsequent Events
  In May
2009, the FASB issued accounting guidance now codified as FASC Topic 855,
“Subsequent Events,” which establishes general standards of accounting for, and
disclosures of, events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. FASC Topic 855 is
effective for interim or fiscal periods ending after June 15, 2009. Accordingly,
the Company adopted the provisions of FASC Topic 855 on June 30,
2009.  The Company evaluated subsequent events for the period from
February 28, 2010, the date of these financial statements, through June 8, 2010,
which represents the date these financial statements are being filed with the
Commission. With respect to this disclosure, the Company has not evaluated
subsequent events occurring after June 8, 2010.
 
 On May
28, 2010 the Company settled a dispute with Televisual Media Works, LLC
(“Televisual Media”) and certain principals of that entity. The settlement
requires Televisual to forego its rights under the Asset Purchase Agreement
entered into in June 2009 (see Note 4) in exchange for a modification to the
future debt obligations and stock issuances that were initially agreed upon.
Under the terms of the settlement agreement the Company is required to issue
1,750,000 shares of common stock immediately and pay $100,000 on or before June
15, 2010. In addition, beginning on August 1, 2010, the Company will pay
Televisual Media twenty monthly payments of $50,000 each for a total of $1.0
million.
 
 The
dispute pertained to certain matters separate from the Asset Purchase Agreement
including services and capabilities that were expected to be provided in order
to enhance features and to expand viewership subsequent to the acquisition.
Management has not determined the impact of the settlement agreement, if any, on
the acquired intangible assets.
 
 On
November 17, 2009, an action was filed for breach of contract by a service
provider to a wholly-owned subsidiary (Brands on Demand, LLC) of the Company
which had previously been dissolved. A Motion to Dismiss was filed, after which
the Company agreed to participate in the mediation program offered by the United
States District Court for the District of Columbia. On April 10, 2010, a
settlement was reached whereby the Company agreed to a settlement amount of
$65,000 consisting of a cash payment of $25,000 and $40,000 worth of the
Company’s common stock (approximately 70,000 shares at the date of the
settlement).
  F-33




Item
9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure





Effective
as of the consummation of the reverse merger with Maximus Exploration
Corporation on October 9, 2008, the Company dismissed Malone & Bailey, P.C.,
an independent registered public auditors (“Malone”), as its accountants. Malone
had previously been engaged as the accountants to audit Maximus’ financial
statements and review the Company’s unaudited financial statements. The reason
for the dismissal of Malone is that, upon the consummation of the Acquisition on
October 9, 2008, (i) the former stockholders of EXVG owned a majority of the
outstanding shares of Maximus’ common stock and (ii) Maximus’ primary business
unit became the business previously conducted by EVUSA. The Board of Directors
of Maximus deemed it practical that EVUSA’s registered independent public
auditors be engaged, going forward.





In each
of the reports, Malone stated that its “going concern” opinion was made in light
of the fact that the Company was a “blank check” company with no operations and
had not made any efforts to identify a possible business combination at the time
of the Company’s respective financial statements. The decision to change the
Company’s registered independent public auditors was approved by the Company’s
board of directors on October 9, 2008.





From
February 22, 2007 through October 9, 2008, there were no disagreements between
Maximus and Malone on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure which, if not
resolved to the satisfaction of Malone, would have caused it to make reference
to the matter in connection with the firm’s reports.




On
October 9, 2008, the Company engaged Kramer, Weisman & Associates, LLP
(“Kramer”) as its new registered independent public auditors. The appointment of
Kramer was approved by our board of directors on October 9, 2008. During our
most recent fiscal year ended February 28, 2010, the Company did not consult
Kramer regarding either: (i) the application of accounting principles to a
specific completed or contemplated transaction, or the type of audit opinion
that might be rendered on our financial statements; or (ii) any matter that was
the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation
S-K.


38


Prior to
engaging Kramer, the Company had not consulted Kramer regarding the application
of accounting principles to any specified transaction, completed or proposed, or
the type of audit opinion that might be rendered on the Company’s financial
statements.




Item
9A.  Controls and Procedures





As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end
of the period covered in this report, we carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures as of February 28, 2010.  This evaluation was carried out under
the supervision and with the participation of our Chief Executive Officer (CEO)
and Chief Financial Officer (CFO), who concluded, that because of the material
weakness in our internal control over financial reporting described below that,
our disclosure controls and procedures were not effective as of February 28,
2010.  A material weakness is a deficiency or a combination of deficiencies
in internal controls over financial reporting such that there is a reasonable
possibility that a material misstatement of our annual or interim financial
statements will not be prevented or detected on a timely basis.





Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in our reports filed under that Act is
accumulated and communicated to management, including our principal executive
officer and our principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.





Our
management is also responsible for establishing internal control over financial
reporting as defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities
Exchange Act of 1934.





Our
internal controls over financial reporting are intended to be designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles. Our internal controls over
financial reporting are expected to include those policies and procedures that
management believes are necessary that:





(i)
            pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of our
      assets;




(ii)
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorizations of our management and
      directors; and




(iii)
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial
statements.





As of
February 28, 2010, management assessed the effectiveness of the our internal
controls over financial reporting (ICFR) based on the criteria set forth in the
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).





Based on
that assessment, management concluded that, during the period covered by this
report, such internal controls and procedures were not effective as of February
28, 2010 and that material weaknesses in ICFR existed as more fully described
below.


39


As
defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial
Reporting that is Integrated with an Audit of Financial Statements and Related
Independence Rule and Conforming Amendments,” established by the Public Company
Accounting Oversight Board ("PCAOB"), a material weakness is a deficiency or
combination of deficiencies that result in a more than a remote likelihood that
a material misstatement of annual or interim financial statements will not be
prevented or detected. In connection with the assessment described above,
management identified the following control deficiencies that represent material
weaknesses as of February 28, 2010:





·
            The
      Company does not have an independent audit committee or audit committee
      financial expert.  Although our board of directors serves as the
      audit committee it has no independent directors. Further, we have not
      identified an audit committee financial expert on our board of
      directors.  These factors are counter to corporate governance
      practices as defined by the various stock exchanges and may lead to less
      supervision over management. Our management determined that this
      deficiency constituted a material
weakness.





·
            Due
      to liquidity issues, we are not able to immediately take any action to
      remediate this material weakness. However, when conditions allow, we
      will expand our board of directors and establish an independent audit
      committee consisting of a minimum of three individuals with industry
      experience including a qualified financial
      expert.  Notwithstanding the assessment that our ICFR was not
      effective and that there was a material weakness as identified herein, we
      believe that our consolidated financial statements contained in this
      Annual Report fairly present our financial position, results of operations
      and cash flows for the years covered thereby in all material
      respects.





This
Annual Report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only management’s report in this
Annual Report.





There was
no change in our internal control over financial reporting that occurred during
the fourth quarter of our fiscal year ended February 28, 2010 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.




Item
9B.  Other Information





None





PART
III





Item
10.  Directors, Executive Officers and Corporate Governance





The
following table sets forth the respective names, ages and positions of our
directors and executive officers as well as the year that each of them commenced
serving as a director with Next 1. The terms of all of the directors, as
identified below, will run until their successors are elected and
qualified.





NAME
              
              AGE
              
              POSITION
              
              OFFICER AND/OR
                DIRECTOR SINCEJames
      Whyte
              
              63
              
              Chairman
      of the Board
              
              2008William
      Kerby
              
              52
              
              Chief
      Executive Officer and Vice Chairman
              
              2008Richard
      Sokolowski
              
              57
              
              Chief
      Financial Officer
              
              2009Anthony
      Byron
              
              56
              
              Chief
      Operating Officer and Director
              
              2008Mark
      A. Wilton
              
              64
              
              Director
              
              2009


40


Management and Director
Biographies:





James
Whyte - Chairman:





James
Whyte, age 63, has over 40 years experience in the Travel and Real Estate
Industries as senior management, entrepreneur and owner of several Travel and
Real Estate related companies. Mr. Whyte’s Travel experience includes airlines
(chartered & scheduled), hotels, cruises, rental cars, transportation (bus),
tour operations, wholesale, retail travel, consolidator, travel magazines and
marketing companies. Mr. Whyte’s Real Estate experience includes management and
ownership of hotels, marinas, apartment buildings and development companies. Mr.
Whyte also served on many committees and boards including: Hawaii Visitor
Bureau, ASTA and White House Commission on Tourism and Travel. Mr. Whyte also
owns breeds and races Thoroughbred Horses in the US, Canada &
Australia.





William Kerby – Chief Executive
Officer and Vice Chairman:





William
Kerby, age 52 is the founder of Next 1, Interactive, Inc.  From 2008 to
present, he has been the architect of the Next One model, overseeing the
development and operations of the Travel, Real Estate and Media divisions of the
company. From 2004 to 2008, Mr. Kerby served as the Chairman and CEO of
Extraordinary Vacations Group whose operations included Cruise & Vacation
Shoppes, Maupintour Extraordinary Vacations and the Travel Magazine - a TV
series of 160 travel shows. From 2002 to 2004 Mr. Kerby was Chairman of Cruise
& Vacation Shoppes after it was acquired by a small group of investors and
management from Travelbyus. Mr. Kerby was given the mandate to expand the
operations focusing on a “marketing driven travel model.” In June 2004 Cruise
& Vacation Shoppe was merged into Extraordinary Vacations Group. From 1999
to 2002 Mr. Kerby founded and managedTravelbyus, a publicly
traded company on the TSX and NASD Small Cap. The launch included an
intellectually patented travel model that utilized technology-based marketing to
promote its travel services and products. Mr. Kerby negotiated the acquisition
and financing of 21 Companies encompassing multiple tour operators, 2,100 travel
agencies, media that included print, television, outdoor billboard and wireless
applications and leading edge technology in order to build and complete theTravelbyus model.
The company had over 500 employees, gross revenues exceeding $3 billion and a
Market Cap over $900 million. Prior to this Mr. Kerby founded  Leisure
Canada – a company that included a nationwide Travel Agency, international tour
operations, travel magazines and the Master Franchise for Thrifty Car Rental
British Columbia.





Mark
Wilton - Director:





Mark A.
Wilton, age 64, currently serves as the President and CEO of MarWil Investments
GMBh – Co-KG, an international corporation that has owned and managed European
commercial real estate since 1976.  Mr. Wilton also serves as the sole
director of MarWil Investments USA, a company he founded in 1978, that owns,
develops and manages residential income properties.  MarWil
Investments USA was one of the largest apartment development companies in the
Western United States from 1978 through 2004.  Mr. Wilton is also a
Board Member of Jesup & Lamont Securities Corp., a full-service brokerage
and investment banking firm specializing in institutional, retail sales, trading
services and equity research.  Founded, in 1877, Jesup & Lamont is
one of the oldest brokerage firms in the United States.  From 1978 to
1985, Mr. Wilton served as the President and CEO of Marlind Inc., a general
contracting and development company Mr. Wilton founded.  Mr.
Wilton has also held directorships with several banks.  From 1976 to
2008, Mr. Wilton founded and then served as a director of Centennial
Bank.  In 1981, Mr. Wilton founded and subsequently served as a
director of Bay Bank of Commerce.   In 2004, Bay Bank of Commerce
was sold to Greater Bay Bank, where Mr. Wilton remained as a director
until Greater Bay Bank was subsequently sold to Wells Fargo Bank in
2008.  Mr. Wilton is a graduate of the American College of Switzerland
with a B.B.S. in both International Economics and International
Business.





Anthony
Michael Byron- Chief Operating Officer and Director:





Anthony
Michael Byron, age 56, is a 35 year industry veteran and a respected leader in
the motivational incentive travel and event marketing industry. He graduated
from York University in Toronto with an Honors Bachelor of Arts
Degree.


41


Mr. Byron
has owned and operated various different Travel and Incentive companies,
including wholesale tour operations, retail travel, Incentive travel and Event
management. Prior leadership roles in the travel field includes; President of
Hemisphere Tours Ltd. (an international tour wholesale package tour operator)
which was founded in 1977., He later served as Owner and President of
Travelsphere Inc./Select Travel Inc. (a retail and Incentive tour
company), and then as Owner/President of The Travel Producers Inc. (a
corporate Incentive travel firm which was merged with Meridican Incentive
Consultants in 1986).





Mr. Byron
remains active as the Majority Shareholder and President and CEO of Meridican
Incentive Consultants specializing in Incentive programs and event management
for its North American client base.   Mr. Byron relocated to
Weston Florida on August 1, 2008 and is the Chief Operations Officer for Next 1
Interactive, Inc.





Richard
Sokolowski – Chief Financial Officer:





Mr.
Sokolowski, age 57, combines over 25 years of experience in various industries
and positions including finance, information technology & project
management, operations and SEC reporting, including Sarbanes-Oxley compliance.
Mr. Sokolowski spent the last eleven years in various capacities, most recently
as Vice President-Corporate Controller, with Memry Corporation, a
publicly-traded company listed on the American Stock Exchange.  From
1995 through 1998 he was the Controller and Director of Management Information
Services for Harco Laboratories, Inc.  Previously, he had been
associated with a number of different public and privately held companies
holding various middle and senior management positions.  Mr.
Sokolowski earned a M.S. Degree in Computer Science from the University of New
Haven and a B.S. Degree in Accounting from Central Connecticut State
University.  He is also a Certified Public Accountant (CPA), Certified
Management Accountant (CMA), Certified Financial Manager (CFM) and Certified
Information Technology Professional (CITP).





Family
Relationships amongst Directors and Officers:





There are
no family relationships among our directors, executive officers, or persons
nominated or chosen by the Company to become directors or executive
officers.





Involvement
in Certain Legal Proceedings





None of
the executive officers of the Company (i) has been involved as a general partner
or executive officer of any business which has filed a bankruptcy petition; (ii)
has been convicted in any criminal proceeding nor is subject to any pending
criminal proceeding; (iii) has been subjected to any order, judgment or decree
of any court permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities; and (iv) has been found by a court, the Commission or the
Commodities Futures Trading Commission to have violated a federal or state
securities or commodities law.





Information
Concerning Non-Director Executive Officers





We
currently have one executive officer serving who is a non-director. Richard
Sokolowski our Chief Financial Officer is not a member of our Board of
Directors.





COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934





Section
16(a) of the Exchange Act requires the Registrant’s directors and officers, and
persons who beneficially own more than 10% of a registered class of the
Registrant’s equity securities, to file reports of beneficial ownership and
changes in beneficial ownership of the Registrant’s securities with the SEC on
Forms 3, 4 and 5. Officers, directors and greater than 10% stockholders are
required by SEC regulation to furnish the Registrant with copies of all Section
16(a) forms they file.





Based
solely on our review of certain reports filed with the Securities and Exchange
Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended, the reports required to be filed with respect to transactions in our
Common Stock during the fiscal year ended February 28, 2010, were timely, with
the exception of those instances listed below:


42


·
            Mark
      Wilton, a member of the Board of Directors inadvertently failed to timely
      file a Form 4 for the purchase of 225,700shares of our Common Stock for
      the period ending February 28, 2010.  Mr. Wilton reported these
      transactions on a Form 5 filed on April 15, 2010,
  and





·
            Richard
      Sokolowski, the Company’s Chief Financial Officer, received 25,000 shares
      of restricted Common Stock on January 25, 2010.  Mr. Sokolowski
      reported these transactions on a Form 3 filed on June 2,
    2010.





Item
11.  Executive Compensation





DIRECTOR
AND OFFICER COMPENSATION





The
following table sets forth information concerning the total compensation that we
have paid or that has accrued on behalf of our executive officers during the
fiscal years ended February 28, 2010 and February 28, 2009




Name and principal
                                                                                  position
                                                                                
                                                                                Fiscal Year
                                                                                  Ended
                                                                                
                                                                                Salary
                                                                                  ($)
                                                                                
                                                                                
                                                                                Bonus
                                                                                  ($)
                                                                                
                                                                                
                                                                                Stock
                                                                                  Awards
                                                                                  ($)
                                                                                
                                                                                
                                                                                Option
                                                                                  Awards
                                                                                  ($)
                                                                                
                                                                                
                                                                                Non-Equity
                                                                                  Incentive Plan
                                                                                  Compensation
                                                                                  ($)
                                                                                
                                                                                
                                                                                Nonqualified
                                                                                  Deferred
                                                                                  Compensation
                                                                                  Earnings
                                                                                  ($)
                                                                                
                                                                                
                                                                                All Other
                                                                                  Compensation
                                                                                  ($)
                                                                                
                                                                                
                                                                                Total
                                                                                  ($)James Whyte
                                                                                
                                                                                2010
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0Chairman of the Board
                                                                                
                                                                                2009
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0William
      Kerby
                                                                                
                                                                                2010
                                                                                
                                                                                
                                                                                300,000
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                14,400
                                                                                
                                                                                
                                                                                
                                                                                314,400CEO
      and Vice Chair (1)
                                                                                
                                                                                2009
                                                                                
                                                                                
                                                                                300,000
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                14,400
                                                                                
                                                                                
                                                                                
                                                                                314,400Mark
      A. Wilton
                                                                                
                                                                                2010
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0Director
                                                                                
                                                                                2009
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0Anthony
      Byron
                                                                                
                                                                                2010
                                                                                
                                                                                
                                                                                240,000
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                240,000COO
      and Director (2)
                                                                                
                                                                                2009
                                                                                
                                                                                
                                                                                240,000
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                240,000Richard
      Sokolowski
                                                                                
                                                                                2010
                                                                                
                                                                                
                                                                                100,000
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                100,000CFO
      (3)
                                                                                
                                                                                2009
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0
                                                                                
                                                                                
                                                                                
                                                                                0





(1)
            Bill Kerby receives an annual
      base salary of $300,000 of which $60,000 is deferred. He also receives an
      auto allowance in the amount of $1,200 per month, as additional
      compensation





(2)
            Anthony Byron receives an annual
      base salary of $240,000 of which $48,000 is
      deferred.





(3)
            Richard Sokolowski was appointed
      as the Company’s Chief Financial Officer and Principal Financial Officer
      effective July 6, 2009.  Mr. Sokolowski’s base salary is
      $150,000.





Outstanding
Equity Awards at Fiscal Year-End





The
shareholders approved the Next 1 Interactive, Inc. 2009 Long-Term Incentive Plan
(the “2009 Plan”) at the annual shareholders meeting on October 28,
2009.  Under the 2009 Plan, 4,500,000 shares of common stock are
reserved for issuance on the effective date of the 2009 Plan. Utilizing a
variety of equity compensation instruments, we plan to use the 4,500,000 shares
under the 2009 Plan to:





1)
            Attract and retain key
      employees and directors, including key Next 1 executives,
    and;


2)
            Provide an incentive for them to
      assist Next 1 to achieve long-range performance goals and enable them to
      participate in the long-term growth of the
  Company.





As of February 28, 2010, the Company
has not granted any equity awards from this plan to its
employees.


43




Employment
Agreements





We have
the following employment contracts with the named executive
officers:





William
Kerby has an employment agreement, dated October 15, 2006, with the Company.
Pursuant to this employment agreement, Mr. Kerby is employed as the Company’s
Chief Executive Officer at an annual base salary of $300,000 in cash and Company
common stock.  He may also, as determined by the Board of Directors,
receive a year-end performance bonus. The initial term of the agreement
commenced June 1, 2002 and terminated June 1, 2008, with an automatic renewal
for a period of four years. Upon termination of the second term, the Agreement
shall be automatically renewed for successive periods of four years each subject
to the same terms and conditions, unless modified or terminated by one or both
parties in accordance with the Agreement.





Pursuant
to an employment agreement, dated July 6, 2009 (the “Employment Agreement”), Mr.
Sokolowski was appointed as the Company’s Chief Financial Officer and Principal
Financial Officer. The initial term of the Employment Agreement is for a period
of three years with a minimum base salary of no less than $150,000 per year of
employment.  Mr. Sokolowski will also be eligible for a discretionary
cash bonus that may be set by the Company’s board of directors from time to
time.  In addition, Mr Sokolowski was eligible and received a stock
bonus of 25,000 shares of the Company’s common stock based on the effectiveness
of the systems and financial controls implemented by Mr. Sokolowski within the
90 day and 180 day anniversary dates of Mr. Sokolowski’s
employment.





Significant
Employees





We have
no significant employees other than our executive officers and directors named
in this Annual Report. We conduct our business through agreements with
consultants and arms-length third parties.





Committees
of the Board of Directors





Because
of our limited resources, our Board does not currently have an established audit
committee or executive committee. The current members of the Board perform the
functions of an audit committee, governance/nominating committee, and any other
committee on an as needed basis. If and when the Company grows its business
and/or becomes profitable, the Board intends to establish such
committees.





Code
of Business Conduct and Code of Ethics





Our Board
has adopted a Code of Business Conduct and Ethics.





Item
12.  Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters





The
following table sets forth certain information regarding the beneficial
ownership of our common stock and Series A Preferred Stock as of the date of
this Annual Report by (i) each Named Executive Officer, (ii) each member of our
Board of Directors, (iii) each person deemed to be the beneficial owner of more
than five percent (5%) of any class of our common stock, and (iv) all of our
executive officers and directors as a group. Unless otherwise indicated, each
person named in the following table is assumed to have sole voting power and
investment power with respect to all shares of our common stock listed as owned
by such person. The address of each person is deemed to be the address of the
issuer unless otherwise noted.


44




Title of Class
                                
                                Name of
                                  Beneficial Owner
                                
                                Amount and Nature
                                  of Beneficial Owner
                                
                                
                                Percent of Class(1)Common
      Stock
                                
                                James
      Whyte
                                
                                
                                1,675,000
                                (2)
                                
                                
                                5.0
                                %Series
      A Preferred Stock
                                
                                Chairman
      of the Board
                                
                                
                                0
                                
                                
                                
                                —Common
      Stock
                                
                                William
      Kerby
                                
                                
                                2,927,503
                                (3)
                                
                                
                                8.8
                                %Series
      A Preferred Stock
                                
                                CEO
      & Vice Chairman
                                
                                
                                583,243
                                (4)
                                
                                
                                87.9
                                %Common
      Stock
                                
                                Mark
      Wilton
                                
                                
                                1,260,200
                                
                                
                                
                                3.8
                                %Series
      A Preferred Stock
                                
                                Director
                                
                                
                                0
                                
                                
                                
                                —Common
      Stock
                                
                                Anthony
      Byron
                                
                                
                                1,077,747
                                (5)
                                
                                
                                3.2
                                %Series
      A Preferred Stock
                                
                                Chief
      Operating Officer and Director
                                
                                
                                80,000
                                (6)
                                
                                
                                12.1
                                %Common
      Stock
                                
                                Richard
      Sokolowski
                                
                                
                                25,000
                                
                                
                                
                                0.1
                                %Series
      A Preferred Stock
                                
                                Chief
      Financial Officer
                                
                                
                                0
                                
                                
                                
                                —Common
      Stock
                                
                                All
      Officers and Directors as a group
                                
                                
                                6,965,450
                                
                                
                                
                                20.9
                                %Series
      A Preferred Stock
                                
                                (5
      persons)
                                
                                
                                663,243
                                
                                
                                
                                100
                                %





(1)
            The
      percentage of common stock held by each listed person is based on
      33,305,626 shares of common stock issued and outstanding as of the
      date of this Annual Report. The percentage of Series A Preferred Stock
      held by each person is based on 663,243 shares of Series A Preferred Stock
      issued and outstanding as of this date of this Annual Report. Pursuant to
      Rule 13d-3 promulgated under the Exchange Act, any securities not
      outstanding which are subject to warrants, rights or conversion privileges
      exercisable within 60 days are deemed to be outstanding for purposes of
      computing the percentage of outstanding securities of the class owned by
      such person but are not deemed to be outstanding for the purposes of
      computing the percentage of any other
person.





(2)
            James
      Whyte holds 500,000 shares individually. Mr. Whyte’s family members hold
      an additional 1,175,000 shares. As a result, Mr. Whyte beneficially owns
      1,675,000 shares of common stock of the
Company.





(3)
            William
      Kerby holds 2,921,303 shares individually. Mr. Kerby’s family member holds
      an additional 1,200 shares. Mr. Kerby is also the owner of In-Room Retail
      Systems, LLC, an inactive company which owns 5,000 shares. Due to these
      relationships, Mr. Kerby beneficially owns 2,927,503 shares of common
      stock of the Company.





(4)
            Having
      the voting equivalency of 100 votes per share (58,324,300
      votes).





(5)
            Anthony
      Byron holds 700,563 shares individually, and his spouse Liana Byron owns
      10,517. Mr. Byron is also CEO and Majority shareholder of Meridican
      Incentive Consultants which owns 366,667 shares. Due to these
      relationships, Mr. Byron beneficially owns 1,077,747 shares of common
      stock of the Company.





(6)
            Having
      the voting equivalency of 100 votes per share (8,000,000
      votes).





Item
13.  Certain Relationships and Related Transactions, and Director
Independence





On March
5, 2010, the Company entered into a promissory note with a director (“Holder”)
of the Company.  Pursuant to the note, the Holder has agreed to loan
the Company $3,500,000. The note has an effective date of January 25, 2010 and a
maturity date of January 25, 2011. The note bears interest at 6% per
annum. The Holder will advance the funds under the terms of the note in
tranches through April 15, 2010.





As
consideration for the loan, the Company has issued to the Holder 7,000,000
warrants with a three-year life and a fair value of $2.3 million to purchase
shares of the Company’s common stock, $0.00001 par value, per share, at an
exercise price of $1.00 per share. The balance of the note payable is
$1,492,346 at February 28, 2010.





45




The fair
value of the warrants was estimated at the date of grant using the Black-Scholes
option-pricing model with the following assumptions:





Risk-free
      interest rate
                  
                  
                  1.46
                  %Dividend
      yield
                  
                  
                  0
                  %Volatility
      factor
                  
                  
                  136.1
                  %Expected
      life
                  
                  1.5
      years





The fair
value of warrants is amortized as finance fees over the term of the loan. The
Company recorded approximately $2.283 million in prepaid finance fees upon
origination and amortized approximately $219,000 in expense during the year. In
addition, interest expense in the amount of $5,000 was recorded on the note
for fiscal 2010.





The
Company has notes payable with a director and officer for approximately $51,000.
The loans bear interest at 18% compounded daily and have no stated maturity
date. Interest expense on the loans was approximately $37,000 and $20,000 for
the years ended February 28, 2010 and February 28, 2009
respectively.





The
Company has a loan payable with a director and officer for approximately
$10,000. The loan bears interest at 4% per annum and has no stated maturity
date. Interest expense on the loan was approximately $400 and $nil for the years
ended February 28, 2010 and February 28, 2009, respectively.





The
Company also has a loan payable to an existing shareholder for approximately
$30,000. The loan bears interest at 10% per year and has no stated maturity
date. Interest expense recorded on the loan for fiscal 2010 was approximately
$4,000.





The
Company also has a loan payable to an existing shareholder for approximately
$17,000. The loan bears interest at 4% per year and has no stated maturity date.
Interest expense recorded on the loan for fiscal 2010 was approximately
$1,000.





The
Company executed two agreements with a family member of an executive who is the
guarantor of a merchant account required to process credit card transactions.
The fee for this service is $2,100 per month. The first agreement is retroactive
to when the merchant account began processing transactions in April of 2007. As
a result, the Company has recorded an accrued expense in the amount of $73,500
at February 28, 2010. The second agreement provides for the same monthly fee in
the amount of $2,100 for a term of 3 years beginning April, 2010.





From time
to time the Company has used the services of a law firm for which a relative
works and that activity was insignificant.




The
Company leases certain telephone and communications equipment through a lease
agreement with a related party. The lease requires monthly payments of $5,078
including interest at approximately 18% per year. The lease expires on June 30,
2011. Interest expense paid on the capital lease was $18,000 and $19,000 during
the fiscal years ended February 28, 2010 and February 28, 2009,
respectively.





Series
A Preferred Stock





On
October 14, 2008, we filed a Certificate of Designations with the Secretary of
State of the State of Nevada therein establishing out of the our “blank check”
Preferred Stock, a series designated as Series A 10% Cumulative Convertible
Preferred Stock consisting of 3,000,000 shares (the “Series A Preferred Stock”).
The holders of record of shares of Series A Preferred Stock is entitled to vote
on all matters submitted to a vote of our shareholders of and is entitled to one
hundred (100) votes for each share of Series A Preferred Stock. On October 14,
2008, we issued an aggregate of 504,763 shares of Series A Preferred Stock to
William Kerby, the Company’s Chief Executive Officer, in recognition of
outstanding loans, personal assets pledged and personal guarantees provided by
the executive, all deemed essential in allowing the Company to continue
operating. On May 10, 2010, an additional 78,480 shares of Series A Preferred
Stock was issued to Mr. Kerby as settlement for accrued dividends. Mr. Kerby
also owns 2,927,503 shares of common stock, which together with his Series A
Preferred Stock, gives him the right to a vote equivalent to 61,251,803 shares
of common stock, representing 61% of the total votes.


46





Director
Independence





None of
our directors are deemed to be independent.





Item
14.  Principal Accountant Fees and Services.





Effective
as of the consummation of the reverse merger with Maximus Exploration
Corporation on October 9, 2008, the Company dismissed Malone & Bailey, P.C.,
an independent registered public auditors (“Malone”), as its
accountants.  Upon the consummation of our merger with Maximus
Exploration Corporation on October 9, 2008, we engaged Kramer, Weisman &
Associates, LLP as our new registered independent public auditors.





(1)
Audit Fees





The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for our audit of annual financial
statements and review of financial statements included in our quarterly
reports or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years were:




2010
                  
                  $
                  42,5002009
                  
                  $
                  37,400





(2) Audit-Related
Fees





The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported in the preceding paragraph:




2010
                  
                  $
                  02009
                  
                  $
                  5,000





(3)
Tax Fees





The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning were:




2010
                  
                  $
                  02009
                  
                  $
                  0





(4)
All Other Fees





The
aggregate fees billed in each of the last two fiscal years for the products and
services provided by the principal accountant, other than the services reported
in paragraphs (1), (2), and (3) was:




2010
                  
                  $
                  02009
                  
                  $
                  0


47





PART
IV





Item
15.  Financial Statements and Exhibits.





Exhibit
                No
              
              Description of Exhibits2.1
              
              Asset
      Purchase Agreement between Next 1 Interactive, Inc. and Televisual Media
      Works, LLC (as filed on Form 8K on August 21, 2009)2.2
              
              $3,000,000
      Zero Coupon Debenture (as filed on Form 8K on August 21,
    2009)2.3
              
              $3,500,000
      Secured Series Convertible Preferred Stock (as filed on Form 8K on August
      21, 2009)3.1
              
              Articles
      of Incorporation of Maximus (as filed on Form SB-2 Registration Statement
      (SEC File No. 333-136630) on August 14, 2006)3.1.1
              
              Amended
      Articles of Incorporation of Maximus (as filed on Form SB-2 Registration
      Statement (SEC File No. 333-136630) on August 14,
    2006)3.1.2
              
              Amendment
      to the Articles of Incorporation of Maximus (as filed on the Company’s
      Amendment No. 1 to Registration Statement on Form S-1 (SEC File
      No. 333-154177) filed on March 12, 2009)3.2.1
              
              Bylaws
      of Next 1 Interactive, Inc. (as filed on Form SB-2 Registration Statement
      (SEC File No. 333-136630) on August 14, 2006)3.2.2
              
              Bylaws
      of Extraordinary Vacations USA, Inc. (as filed on the Company’s Amendment
      No. 1 to Registration Statement on Form S-1 (SEC File No. 333-154177)
      filed on March 12, 2009)4.1
              
              Form
      of Common Stock Certificate (as filed on the Company’s Amendment No. 1 to
      Registration Statement on Form S-1 (SEC File No. 333-154177) filed on
      March 12, 2009)4.2
              
              Certificate
      of Designations of Series A 10% Cumulative Convertible Preferred Stock of
      Next 1 Interactive, Inc. (as filed on the Company’s Amendment No. 1 to
      Registration Statement on Form S-1 (SEC File No. 333-154177) filed on
      March 12, 2009)4.3
              
              Form
      of Private Placement Memorandum (as filed on Form 8-K, filed November 19,
      2009)4.4
              
              Form
      of Warrant (as filed on Form 8-K, filed November 19,
  2009)4.5
              
              Subscription
      Agreement (as filed on Form 8-K, filed November 19,
  2009)10.1
              
              Share
      Transaction Purchase Agreement dated September 24, 2008 between EXVG,
      EVUSA and Maximus (as filed on Form S-1 Registration Statement (SEC File
      No. 333-154177) on October 10, 2008)10.2
              
              Employment
      Agreement between the Company and William Kerby (as filed on the Company’s
      Amendment No. 1 to Registration Statement on Form S-1 (SEC File
      No. 333-154177) filed on March 12, 2009)10.3
              
              Employment
      Agreement between the Company and Richard Sokolowski (as filed on Form
      8-K, filed July 10, 2009)10.4
              
              Consulting
      Agreement between the Company and Anthony Byron (as filed on the Company’s
      Amendment No. 1 to Registration Statement on Form S-1 (SEC File
      No. 333-154177) filed on March 12, 2009)10.5
              
              Purchase
      of all Shares of Home Preview Channel (as filed on Form 8-K, filed
      November 4, 2008)10.6
              
              Purchase
      of 100% of the issued and outstanding shares of Loop Networks(as filed on Form
      8-K, filed November 4, 2008)14.1
              
              Code
      of Ethics (as filed on the Company’s Amendment No. 1 to Registration
      Statement on Form S-1 (SEC File No. 333-154177) filed on March 12,
      2009)14.2
              
              Code
      of Business Conduct (as filed on the Company’s Amendment No. 1 to
      Registration Statement on Form S-1 (SEC File No. 333-154177) filed on
      March 12, 2009)16.1
              
              Letter,
      dated October 10, 2008, by Malone & Bailey, P.C., registered
      independent public auditors (3)31.1
              
              Certification
      of the Registrant’s Principal Executive Officer pursuant to 15d-15(e),
      under the Securities and Exchange Act of 1934, as amended, with
      respect to the registrant’s Annual Report on Form 10-K for the fiscal year
      ended February 28, 201031.2
              
              Certification
      of the Registrant’s Principal Financial Officer pursuant to 15d-15(e),
      under the Securities and Exchange Act of 1934, as amended, with
      respect to the registrant’s Annual Report on Form 10-K for the fiscal year
      ended February 28, 201032.1
              
              Certification
      of the Registrant’s Principal Executive Officer pursuant to 18 U.S.C.
      Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 200232.2
              
              Certification
      of the Registrant’s Principal Financial Officer pursuant to 18 U.S.C.
      Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of
2002


48




SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.





Date:  June
      8, 2010
              
              NEXT
      1 INTERACTIVE, INC.By:
              /s/ William KerbyWilliam
      Kerby
                Chief
      Executive Officer
                and
      Vice Chairman
                (Principal
      Executive Officer)





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.




Signature
                
                Title
                
                Date/s/ William Kerby
                
                Chief
      Executive Officer and Vice Chairman
                
                June
      8, 2010William
      Kerby
                
                (Principal
      Executive Officer)/s/ Richard Sokolowski
                
                Chief
      Financial Officer
                
                June
      8, 2010Richard
      Sokolowski
                
                (Principal
      Financial and Accounting Officer)/s/ James Whyte
                
                Chairman
      of the Board
                
                June
      8, 2010James
      Whyte/s/ Anthony Byron
                
                Chief
      Operating Officer and Director
                
                June
      8, 2010Anthony
      Byron/s/ Mark Wilton
                
                Director
                
                June
      8, 2010Mark
      Wilton


49