UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K





| | x | ANNUAL REPORT UNDER SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ------------------------------------------------------------------------------





For the fiscal year ended: February
28, 2013



| |  ̈ | 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
        incorporation or formation) |  | (I.R.S. employer
        identification number)



2690 Weston Road, Suite 200

Weston, FL 33331

(Address of principal executive offices)



(954) 888-9779

(Registrant’s telephone number)



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. ̈YesxNo



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ̈YesxNo



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.xYes ̈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).xYes ̈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 | x



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



The Registrant’s revenue for its most
recent fiscal year was $987,115.



The aggregate market value
of the voting and non-voting common equity held by non-affiliates of the registrant on August 31, 2012, based on a closing price
of $0.52 was approximately $20,316,400. As of June 11,
2013, the registrant had 13,752,097 shares of its common stock, par value $0.00001 per share, outstanding.















TABLE OF CONTENTS



|Item:      |                                                                                                                    | Page
    No.:
|---------- | ------------------------------------------------------------------------------------------------------------------ | -------------
|           |                                                                                                                    |              
|PART I     |                                                                                                                    |              
|Item 1.    | Business.                                                                                                          |              
|Item 1A.   | Risk Factors.                                                                                                      |              
|Item 1B.   | Unresolved Staff Comments.                                                                                         |              
|Item 2.    | Properties.                                                                                                        |              
|Item 3.    | Legal Proceedings.                                                                                                 |              
|Item 4.    | Mine Safety Disclosures                                                                                            |              
|           |                                                                                                                    |              
|PART II    |                                                                                                                    |              
|Item 5.    | Market for Registrant’s Common Equity, Related Stockholders
    Matters and Issuer Purchases of Equity Securities. |              
|Item 6.    | Selected Financial Data.                                                                                           |              
|Item 7.    | Management’s Discussion and Analysis of Financial Condition
    and Results of Operations.                         |              
|Item 7A.   | Quantitative and Qualitative Disclosures About Market Risk.                                                        |              
|Item 8.    | Consolidated Financial Statements and Supplementary Data.                                                          |              
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure.                          |              
|Item 9A    | Controls and Procedures.                                                                                           |              
|Item 9B.   | Other Information.                                                                                                 |              
|           |                                                                                                                    |              
|PART III   |                                                                                                                    |              
|Item 10.   | Directors, Executive Officers and Corporate Governance.                                                            |              
|Item 11.   | Executive Compensation.                                                                                            |              
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholders Matters.               |              
|Item 13.   | Certain Relationships and Related Transactions, and Director Independence.                                         |              
|Item 14.   | Principal Accountant Fees and Services.                                                                            |              
|           |                                                                                                                    |              
|PART IV    |                                                                                                                    |              
|Item 15.   | Exhibits, Financial Statement Schedules.                                                                           |              
|           |                                                                                                                    |              
|SIGNATURES |                                                                                                                    |              





1









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.



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. Extraordinary Vacations
USA Inc. (“EVUSA”), EXVG’s wholly-owned subsidiary, is a Delaware corporation, incorporated on June 24, 2002.
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, by and among 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 hereafter referred to as the “Acquisition.”



The purpose of the Acquisition
was so that Next 1 would become a fully reporting company with the U.S. Securities and Exchange Commission and have our stock
quoted on the Over-the-Counter Bulletin Board (the “OTCBB”).







2









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 9, 2012, Next 1 and RealBiz Media Group, Inc.,
formerly known as Webdigs, Inc. (“Webdigs”), , completed the transactions contemplated by that certain Share
Exchange Agreement entered into on April 4, 2012 (the “Exchange Agreement”). Under the Exchange Agreement, our
Company exchanged with Webdigs all of the outstanding equity in Attaché Travel International, Inc., a Florida
corporation and wholly owned subsidiary of Next 1 (“Attaché”). Attaché owns approximately 85% of a
corporation named RealBiz Holdings Inc. which is the parent corporation of RealBiz360, Inc. (“RealBiz”). RealBiz
is a real estate media services company whose proprietary video processing technology has made it one of the leaders
in providing home virtual tours to the real estate industry. In exchange for our Attaché shares, our Company received
a total of 93 million shares of newly designated Series A Convertible Preferred Stock (“Webdigs Series A Stock”).
The exchange of Attaché shares for Webdigs Series A Stock is referred to as the “Exchange
Transaction.”







Executive Offices and Telephone Number



Our principal executive
offices are located at 2690 Weston Road, Suite 200, Weston, Florida 33331 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.



3







Our Business



We are a media based company focusing
on two segments: travel and real estate. The Company's mission has been to both create and acquire travel and real estate video
content that can be delivered on any screen (Television, web and mobile), all with interactive advertising and transactional shopping
components that engage and enable viewers to request information, make purchase and get an in-depth look at products and services
all through their device of choice.



Next One Interactive
(NXOI) is the parent company of Maupintours Extraordinary Vacations, Next Trip VoyageTV,  its travel division, and holds a
significant interest in Realbiz Media Group, Inc. a publicly traded real estate media company. Additionally the Company holds
certain travel film footage assets through RRTV Network (its discontinued Television Network). The Company is positioning
itself to emerge as a multi revenue stream “Next Generation” media company, representing the convergence of TV,
Mobile devices and the Internet by providing multiple platform dynamics for interactivity on TV, Video On Demand (VOD) and
web solutions. The Company has worked with multiple distributors beta testing its platforms for both travel and real estate
as part of its planned use of its TV programs and film footage for on demand viewing by consumers on web, mobile and TV
Networks. The list of MSO’s (Multiple System Operator) the Company has worked with includes Comcast, Cox, Time Warner
and Direct TV.



Over the last three years the
Company accumulated significant debt as a result of launching and operating a full time television network for travel and real
estate - RRTV Networks. Unfortunately the economic environment for real estate was extremely difficult as the housing market went
through the greatest decline in U.S. history. As such management was faced with difficult choices and embarked on significant
cost cutting and structuring efforts. As a major part of the structuring, Next 1 discontinued broadcasting of the R&R Network
as well as eliminated or realigned its non-conforming operations, reduced staffing and facility leases and worked with its creditors
in efforts to either extend or settle debt. Additionally its real estate division - Next 1 Realty was sold as part of as share
exchange to Webdigs to create a new publicly traded real estate media service company – Realbiz Media Group, Inc. (“Realbiz”)



With the remaining operations,
the Company turned its focus to the build out of web based operations that incorporated the Company’s significant film footage
library in efforts to deliver an enhanced user experience for its travel and real estate platforms. This restructuring for both
travel and real estate divisions when completed will streamline operations and better positioned the Company for the interactive
revolution underway, referred to as “TV everywhere.”



In order to accomplish this
goal the Company has and will continue to incur a number of expenditures throughout the balance of the year. New expenditures
will include: (1) additional broadcast distribution fees for Video on Demand, (2) build out of complimentary websites and mobile
solutions, and (3) outsourcing of key interactive technology solutions to complement our in-house expertise in maximizing the
efficiency of the operation. Additionally, management has looked to use its limited financial resources to reconfigure and/or
retire existing “floorless debt” while at the same time implementing new travel services with key suppliers to create
travel offerings utilizing its film footage and displaying on media platforms on an on demand basis.



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



In management’s view,
finding the funding to complete and implement its video centric model is the key to allow the Company to secure a foothold in
the new interactive platforms for web, mobile and TV platforms. The Company no longer broadcasting the R&R Network as well
as the elimination or realignment of non-conforming operations and build out of web based operations has resulted in both a drop
in revenue from traditional operations while at the same time showed a marked increase in operational costs. These steps are deemed
to be essential by management, as the Company repositions it’s travel and real estate programs to capture potentially very
significant new revenue from the combination of “on demand” content and key websites and mobile solutions that can
integrate components of the R&R Network.



The Company’s management
believes that the Next 1’s separation of travel and real estate assets will allow it to focus its efforts on media and travel
expansion while still maintaining an ownership in Realbiz. This relationship with Realbiz will ensure Next 1’s travel operations
will have access to Realbiz’s significant distribution and reach into real estate agents and homeowners through its television,
web and mobile services. The Realbiz platforms are targeted at home owners and service ideal consumers to promote travel products
to. In short Realbiz will provide a great catalyst to accelerate all of Next 1’s travel programs as it reached across multiple
media platforms to home owners – a key travel demographic.



Since this structuring, Next
1 has entered into several operating agreements and /or has active discussions underway for broadband, cable, Over the Top TV
solutions and “video rich” web portals to enhance viewer experience and streamline its operations. At present the
Company operates travel companies and travel media services, while indirectly through RealBiz Media Group Inc., it carries on
operations of the Home Tour Network. The Home Tour Network owns technology that allows it to create video from real estate agents
home listings which can be featured on hundreds of relevant real estate related websites, You Tube and VOD Television Networks
in 2 cities on the Cox Communications Network and Comcast Cable Network







4







While web and mobile video views
continue to grow exponentially (especially for the younger demographic) the Company still sees great value in television –
especially for the baby boomer generation. Television is enjoyed by all ages and the Cable Market is providing On Demand services
for entertainment and information at home. According to A.C. Nielson Co. “the average American watches more than four hours
of TV each day, or two months of nonstop TV watching per year. In a 65 year life, that person will have spent nine years glued
to the tube.” Cable reaches 70 million U.S. households penetrating 57 percent of the total TV households, and receiving
$26 billion total advertising in 2008, source is TV-Free America.



The Company’s plan is
to expand its revenue base by exploiting all avenues available to it on the Real Estate and Travel verticals – two channels
where it has expertise and knowledge. During the past year, the Company concentrated on restructuring, implementing Video on Demand
Solutions for both television and web. As a result we saw decreased revenues accompanied by significant increases in expenditures
to put the model in place.



Business Model Summary



Next 1’s main focus is
Travel and Real Estate which represent the two largest consumer-passion categories.



The Next 1 business model includes
the deployment of:

| | • | Interactive TV Capabilities
| | - | ---------------------------

| | • | Web Portal and MicroVideo Apps (agent marketing tool
                                                                    under development)
| | - | -------------------------------------------------------------------------------------------------------------------------------------------

| | • | Video
                                                                                                               on Demand solutions
                                                                                                               for both Travel
                                                                                                               & Real Estate
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Exclusivity and/or proprietary positioning
| | - | ------------------------------------------

| | • | Specialized and/or proprietary technology
| | - | -----------------------------------------

| | • | Utilization of Company's real estate and travel licenses
| | - | --------------------------------------------------------

| | • | A scalable, profitable and portable solution for media
| | - | ------------------------------------------------------





Next 1 Interactiverecognized the
convergence taking place in interactive television/ the web and mobile and began the process of recreating several of its key
relationships through its operating business units in 3 distinct categories:



| | Ø | travel
                                                                                                                  operations
| | - | -----------------------------------------------------------------------------------------------------------------------------------

| | Ø | travel
                                                                                                                  media services
                                                                                                                  and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Ø | real
                                                                                                                  estate media
                                                                                                                  services
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Potential revenue streams
    from Next Trip -Traditional Commissions from sales of travel products through Nexttrip and Maupintours as well as Advertising,
    from Preferred Suppliers and key Sponsorships.                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                              
| | Potential revenue streams from Travel
    Video on Demand -Monthly sponsorship packages, pre-roll advertising, travel commissions and referral fees, acceleration
    of company owned travel entities (Maupintours, Extraordinary Vacations and Next Trip)                                                  
| |                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                              
| | Potential revenue streams from Real
    Estate through ownership of RealBiz Media Group -Commissions and referral fees on home sales, pre-roll/post-roll advertising,
    lead generation fees, banner ads and cross market advertising promotions, (listing and marketing fees, web and mobile advertising).



Travel Division:



Next Trip Summary



Next 1 Interactive is
differentiated from other media companies because it owns and operates businesses in its verticals – Next Trip serves the
travel spectrum with travel licenses ARC, IATA, CLIA & Florida Seller of Travel.



The Company owns:



| | • | Maupintour Extraordinary Vacations, which is the oldest
                                                                    tour company in the US.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | • | NextTrip.com – a content rich video and media site
                                                                    in which the Company has contracted to produce state of the
                                                                    art booking engines.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Trip Professional – an at home agency program allowing
                                                                    the consumer to customize and book travel while earning commissions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





5







| | 1. | Maupintour
                                                                                      Extraordinary Vacations
| | -- | ------------------------------------------------------------------------------------------------------------------------



Maupintour Extraordinary
Vacations (“Maupintour”) is the oldest tour operator in North America having a history of over 65 years of creating
and booking tours and activity-focused trips, from private tours of the Vatican to bicycling in the Alps to wine tasting in Italy.
Maupintour books these trips and serves thousands of travel agents around the world. The Company has an active alumni that desires
luxury vacations that includes private sightseeing, fine dining and 4 and 5 star accommodations. The Company previously ran group
tours ranging from 10 to 25; however it has moved its model to customization of high end tours for families, small groups and
individuals. 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.



| | 2. | NextTrip.com
| | -- | ------------



NextTrip.com is being
repositioned as an all-purpose travel site that includes 24/7 customer support, relevant social networking, and travel business
showcases, with a primary emphasis on Video to targeted web users and a secondary promotion to TV viewers via VOD promotion. The
site is scheduled for launch in the 2nd quarter of this year and will provide users 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 plans to generate revenues through advertising, travel commission,
referral fees, and its affiliate program. The travel fulfillment and services for the site are handled by Mark Travel. Mark Travel
is the largest wholesaler of travel products in the United States. NextTrip.com, in conjunction with its Connext1 program and
key media partners (including Realbiz Media, M80, WAYN and Fareportal) will look to serve relevant videos to travelers via four
key elements: (i) television ads (ii) travel video on demand for web and TV (iii) broadband telecast (with the web player surrounded
by interactive banner ads and/or discount travel coupons) and (iv) wireless access to the network on smart phones/devices. The
Company is continuing to build out a targeted travel video with interactive advertising and transactional shopping components
that engage and enable viewers to request information, make reservations and get an in-depth look at products and services all
through their device of choice. The Company believes this approach will allow for multiple revenue streams and integrated media
platforms that deliver measurable return on investment to its advertisers, sponsors and business partners.



Additionally, “on
demand” travel solution allows users to access travel content via digital platforms including Web, Cable, Broadband and
mobile. This delivery of travel information, services and entertainment to consumers will help the Company to capture multiple
revenue streams including transactional commissions, referral fees, advertising and sponsorship. NextTrip.com was originally launched
in July of 2008 as Nexttrip.com. Media and travel booking solutions are being restructured with fulfillment of Travel bookings
being handled by Mark Travel. The Company is targeting completion of new booking engines and video content by July 2013.The website
is www.NextTrip.com.



| | 3. | Trip
                                                                                      Professionals.com
| | -- | ------------------------------------------------------------------------------------------------------------



The Company operates a
Trip Professional Membership Program. The program allows members to join for a $199 annual fee and earn 80% of the commissions
on travel products purchased though the member. At present the Company is working on a new booking engine whereby members can
access wholesale pricing and set commissions and is currently being redesigned to allow its members access to vacations at wholesale
pricing, view destination video and adjust commissions within acceptable limits.



Web Properties



The websites and mobile
applications have started to drive incremental revenues based on the promotion and awareness through the Connext1 program and
VOD TV platforms. The Company has engaged several tourism boards including Japan, Egypt, Columbia, Hawaii and others as it rolls
out its Connext1 program. In addition to cooperative advertising programs it is anticipated that Connext1will generate long term
benefits through sales commissions on the sales of tour packages in 2013.



6









VoyageTV and NextTrip /Connext 1 Media Overview



| | 1. | VoyageTV
| | -- | --------



Voyage.tv is an online travel
channel that produces and distributes travel video programming on the Internet, cable television and Video on Demand.
Voyage.tv also has a branded YouTube channel (VoyageChannel), which broadcasts select videos from Voyage’s slate and
provides an alternate portal for viewers to access content.



The Company was founded in 2006 and was
merged into Next 1 in February 2013. Functioning as a tool for exploring destinations, sharing travel experiences and booking
trips, Voyage.tv is a global platform for travelers to exchange advice and access an inside look at destinations around the world.
Video segments are accompanied by an array of articles written by resident editors within each destination and journaliststhat include travel writingon dining, nightlife, spas, area excursions, attractions, sightseeing, tours, shopping
and other lifestyle interests. Program Categories include:



72-Hours highlights top attractions or things to do
within a destinationNirvana features spas and treatments around the worldGourmet Regionale showcases
restaurants and dining around the worldGuy Stuff focuses on activities and content for a male
demographicGoodlife highlights luxury and upscale lifestyle experiences in each destinationLook
centers on fashion, style and shopping programmingEarth Calling includes eco-centric and “green”
programmingKidz highlights attractions and activities geared towards children and
familiesConversations With features interviews with notable people within destinations





Next 1 plans to intergrate VoyageTV’s
thousands of hours of video footage, distribution channels and partners in with its Connext 1 and NextTrip platforms to accelerate
awareness of travel products, promote travel sales and deliver targeted advertising to consumers at the same time it delivers
unique destination videos within several branded program categories. Next 1 Interactiveoperated a fully programmed television
network know as Resort and Residence TV from November 2009 to March of 2012. The channel delivered current and relevant programming
about the two great passion areas in life – Home and Travel. While the Network served as a significant means of awareness,
the Company believes one of the true hidden values is in the thousands of hours of travel video that were acquired and developed
during the network operations. Adding the VoyageTV content will give the Company an impressive video library. As consumers move
to an on demand world that uses videos accessible from any device, Next 1 will give consumers access to thousands of relevant
videos, many with transactional capabilities linking by way of two new “over the top” television, broadband TV (web
based) and Travel Video on Demand Networks – under the VoyageTV and Next Trip branding.



This linkage of NextTrip Video on Demand
Networks with Television, Web and Mobile devices will give viewers the ability to go from watching a television show such as “Extraordinary
Vacations” to link directly to specific featured trips available for purchase on the Video on Demand Network. The consumer
viewing the Video on Demand Networks may request additional information, order discount coupons, request a call from a licensed
agent or purchase from the comfort of their living room. This viewing and video linkage will be available on Next 1’s TV,
Broadband, Web and Mobile channels.



Key to this interactivity is Next 1 Interactive
holds licenses in the travel industries thereby allowing it to receive referral fees and commissions in addition to traditional
advertising. Additionally the Company’s long term travel relationships allow it to both access travel products and produce
relevant and timely video content for the viewers.



| | 2. | NextTrip /Connext 1 Media Overview
| | -- | ----------------------------------



NextTrip/Connext 1 Mediais positioning
itself to emerge as a multi revenue stream “Next Generation” media company, representing the convergence of TV, Mobile
devices and the Internet by providing multiple platform dynamics for interactivity on the consumer’s device of choice. A
first mover in interactive television and VOD, Next Trip has done test programs including interactive programs into 21 million
homes nationwide with Comcast and DirecTV (the number 1 and 2 players in the industry) under the brand name RRTV Networks.The Company recognized the convergence taking place in interactive television/ the web and began the process of recreating
several of its key relationships in travel and media over the last 3years in efforts to position itself for the interactive
revolution with “TV everywhere”.



The Next Trip Travel marketing solutions
Connext 1 employs unique marketing solutions by utilizing its video technology platform in combination with key travel and media
players including Videology, M80, Tricept and WAYN. Connext 1 should provide a great catalyst of accelerate all of Next Trip’s
travel programs across multiple media platforms. Television is enjoyed by all ages and with the advent of TV and video being available
on multiple devices (TV/Phone/ Computer/ iPad), providing On Demand services for entertainment, information and transactional
purposed appears to have a very bright future.



NextTrip/Connext 1 Mediawill provide
access to travel video on a 24/7 basis supported by full service travel divisions and key partnerships with multiple cruise and
tour groups within the United States. NextTrip will use network original programs with thousands of hours of travel footage to
create valuable and relevant content for its viewers on an On demand basis to any device. The Company is uniquely positioned to
deliver a relevant Video to the user with calls to action an access to additional ON Demand travel products under the NextTrip
-Vacation travel Portal launching in its second quarter.



7







In the travel segment the Company has
a full line up of programming from VoyageTV and its RRTV Network including key television shows:



| | Ø | “Extraordinary
                                                                                                                 Vacations”-
                                                                                                                 Next Trip has
                                                                                                                 created the ultimate
                                                                                                                 travel shopping
                                                                                                                 show where you
                                                                                                                 can learn about
                                                                                                                 the hottest new
                                                                                                                 destinations,
                                                                                                                 new ways to travel,
                                                                                                                 new travel products,
                                                                                                                 helpful travel
                                                                                                                 tips and best
                                                                                                                 of all, the latest
                                                                                                                 travel deals.
                                                                                                                 From cruising
                                                                                                                 to golf resorts,
                                                                                                                 Caribbean or
                                                                                                                 European destinations,
                                                                                                                 guided tours
                                                                                                                 plus great deals
                                                                                                                 on car rentals,
                                                                                                                 airlines, travel
                                                                                                                 packages and
                                                                                                                 lots more..
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | The
                                                                                                                 Travel Magazine- The Travel
                                                                                                                 Magazine is one
                                                                                                                 of the largest
                                                                                                                 sources of professionally
                                                                                                                 produced travel
                                                                                                                 video featuring
                                                                                                                 160 shows from
                                                                                                                 80 countries.
                                                                                                                 Each show is
                                                                                                                 24 minutes of
                                                                                                                 programming of
                                                                                                                 destinations
                                                                                                                 around the world.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | The
                                                                                                                 Golf Show-
                                                                                                                 Next 1 purchased
                                                                                                                 40 “Golf
                                                                                                                 Show” episodes
                                                                                                                 with all accompanying
                                                                                                                 rights and properties.
                                                                                                                 The shows are
                                                                                                                 used for short
                                                                                                                 clips with tips,
                                                                                                                 tricks, and destinations.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Ø | VoyageTV– 1000’s
                                                                                                               of hours of travel
                                                                                                               footage from around
                                                                                                               the globe featuring
                                                                                                               top attractions, things to do,
                                                                                                               spas, dining around
                                                                                                               the world, luxury
                                                                                                               and upscale lifestyle
                                                                                                               experiences
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The primary web properties are:



| | • | www.nxoi.com;
| | - | -------------

| | • | www.RRTV.com;
| | - | -------------

| | • | www.NextTrip.com;
| | - | -----------------

| | • | www.voyage.tv;
| | - | --------------

| | • | www.Maupintour.com; and
| | - | -----------------------

| | • | www.tripprofessionals.com.
| | - | --------------------------



In
travel the Company is actively working on creating and/or expanding several key relationships with travel and media suppliers
to allow it to monitor and distribute its travel products, videos and key travel suppliers videos with calls to action across
millions of web and mobile devices. As the travel businesses gain
more awareness through these media platforms, it is expected that the Travel Unit’s revenues will increase significantly,
not only from increased tour business, but from new revenue streams generated by the network, more specifically, revenue generated
from web advertising and referrals as well as TV shows, commercials and leads.







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,
NextTrip.com and the Trip Professionals program. 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. 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 Travel sites. 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 was broadcast as part of R&R’s
travel destinations programming as well as footage available through tourism boards and key travel suppliers.





8







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 and NextTrip.com. The core travel businesses cater to upscale clientele seeking
customized trips. The Company estimates that its target market for Maupintour represents less than 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. Conversely, the introduction of programs
like Trip Professionals could target a significantly larger percentage of U.S. domestic leisure travelers as the products and
commission sharing represent substantial savings to the average consumer.



Real Estate Division



In 2012 the Company sold all real estate
assets of Next 1 Realty to a separate public entity with Next 1 initially controlling 93 percent ownership. This move was undertaken
by management to allow separation of the real estate and travel assets and thereby assist in fund raising without Next 1 incurring
any additional debt. Realbiz Media then started a planned nationwide rollout of the Home Tour Network in conjunction with its
partner Realtor.com by initially launching the first 2 of multiple cities in the U.S.A (Las Vegas and Atlanta). Additionally during
this period the Company suspended the R&R Network distribution on DirecTV and cable distribution. It is the Company’s
intention to add additional broadcast distributions through “on demand” solutions for web, mobile and television VOD
networks through both its own operations and through Realbiz operations.



Next 1 is a multi-faceted interactive
media company whose key focus is around two of the most universal, yet powerful consumer-passion categories - real estate and
travel. The Company plans to deliver targeted content via digital platforms including Satellite, Cable, Broadcast, Broadband,
Web, Print and Mobile. Its media platforms include a TV Network programming real estate through Realbiz’s Video-On-Demand
(“VOD”) channel called Home Tour Network (“HTN”), and operated under the Realtor.com channel. The Realtor.com
channel will have a video rich supporting real estate websites, and agent marketing solution known as a MicroVideo App. The Travel
operations will include multiple websites including “RRTV.com”, “Maupintour.com”, “NextTrip.com”
and “Voyagetv.com”. All sites will be integrated to include Video-On-Demand (“VOD”) featuring thousands
of travel videos, articles, social media links and customized booking engines.



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 fourth quarter of fiscal year 2013. 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 will be the real estate portal that encompasses most of the real estate listings in video format as well as the VOD television
network - the HTN real estate channel branded as the Realtor.com Channel. The television properties are the key platforms that
differentiate the Company from our competition. The ability to launch a full time a nationwide real estate VOD TV network that
reaches millions of households and can be accessed by millions of households on the device of their choice is unusual in the television
industry. The price of entry, the programming and advertising needs and the opportunity to enhance the multi-platform network
with interactive 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 should 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 for both the travel and real estate operations The Company’s executive team has extensive backgrounds in the travel
and real estate sectors and has been augmented by experienced media developers and marketers.



The Company is in the final stages of
structuring 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 general and administrative expenses 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.



RealBiz Media Group Inc.



(Realbiz) is a publicly traded
Real Estate Media Service company that has positioned itself in to be both a media specialist and a licensed operator. As such
the Company is poised to emerge as a multi revenue streams from advertising revenues as well as commissions and referral fees.
This new “Next Generation” media company is well positioned to capture revenues from the convergence of TV, Mobile
devices and the Internet by providing video, search and purchase capabilities on multiple platform dynamics for web, mobile, interactivity
on TV and Video On Demand. Realbiz Media currently operates an INTERACTIVE VOD Network for Real Estate in conjunction with its
partner Realtor.com. The network is branded under the name of Home Tour Network and is carried on Cox Communications and Comcast
stations. In late May 2012, RealBiz Media signed a significant multiyear partnership with Realtor.com that included agreements
to rebrand the network to “Realtor.com channel” and expand the network into 55 million households. Additionally the
Company has been commissioned to develop a major real estate web portal and enhanced widget/micro video app platforms to work
in conjunction with Realtor.com and other major real estate brokerage groups.



9









RealBiz Media Group Inc. Overview and
Business Model Summary

Next 1 is a major shareholder in RealBiz
Media Group Inc (Realbiz). Realbiz is in the Real Estate Media and services arena focusing on both Home Search and Home Ownership
solutions as key consumer-passion categories. The business model includes:



| | · | Web,
                                                                                                               Mobile and Interactive
                                                                                                               TV Capabilities
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Video
                                                                                                               on Demand solutions
                                                                                                               for Real Estate
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Exclusivity
                                                                                                               and/or proprietary
                                                                                                               positioning
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Specialized
                                                                                                               and/or proprietary
                                                                                                               technology
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Utilization
                                                                                                               of Company's real
                                                                                                               estate licenses
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | A
                                                                                                               scalable, profitable
                                                                                                               and portable solution
                                                                                                               for media
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Key
                                                                                                               partnerships in
                                                                                                               real estate
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | An
                                                                                                               agent friendly
                                                                                                               model
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





RealBiz. is a leader in digital media
and marketing for the real estate Industry. The Company includes a fully licensed real estate division (formerly known as Webdigs)
, certain key TV media contracts ( Extraordinary Vacation Homes/ Third home) and a Virtual Tour and Media group (Realbiz 360)
which enjoys significant real estate industry servicing contracts. As a combined group, the key driver for all is the Company’s
proprietary technology which allows for an automated conversion of data (text and pictures of home listings) to a video with voice
and music.



Once created, these home listing videos
are automatically distributed to multiple media platforms (Television, broadband, web and mobile) for consumer viewing. From this
core technology the Company has expanded its operations to encompass the following 3 areas:



| | 1. | Home Tour Network - Real Estate Virtual Tour and
                                                                      Video on Demand Agent Offering - real estate agents
                                                                      can have a video created of their customer’s homes
                                                                      and then posted on television, over 200 real estate websites,
                                                                      You Tube, and mobile applications for a monthly fee of $89.
                                                                      The Company currently works with over 20,000 agents monthly.
                                                                      This Network offers unique Advertising Opportunitiesdue to the broad media exposure of highly targeted consumers,
                                                                      the Company is positioned to capture income from pre-roll/post-roll
                                                                      advertising for televisions, lead generation fees, banner
                                                                      ads and cross market advertising promotions.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Realtor.com Partnership – Expanding Home Tour
                                                                      Networks to include Video Portal, Widget and Mobile applications
                                                                      –the Company is developing a major real estate
                                                                      web portal and Agent Widget Program to work in conjunction
                                                                      with Realtor.com under a multiyear agreement. Rollout
                                                                      is planned in the second quarter of 2013 and when finished
                                                                      it will include an “all about home ownership”
                                                                      website for the consumer along with a turnkey marketing
                                                                      model using widgets for the agents.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Traditional real estate sales –the Company
                                                                      has licenses in 19 States and is positioned to take advantage
                                                                      of both and a improving real estate market.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



With the move to automate creation processes
in combination with emerging video adoption, Realbiz Media now develops custom Enterprise solutions to support our existing and
new Franchise partners. Though photos and virtual tours are listed as highly important on the home buyer’s lists, the astonishing
growth of YouTube and Social Media fueled by the change in consumer demographics has left the Real Estate Industry scrambling
to keep up. Realbiz Media`s direct feed services into listing databases provides for the automated creation and syndication of
Virtual Tours and YouTube Videos posted directly to YouTube Channels and promoted on Social Networks. These solutions continue
to support our Agent/Broker revenue base through setup and monthly recurring fees. These capabilities and forward thinking were
key elements in the establishment of a multiyear contract with Move.com/Realtor.com



Overview



| | 1. | HOME TOUR NETWORK
| | -- | -----------------



HOME TOUR NETWORK (HTN) is our
flagship product to provide hyper-geo local real estate information to localized communities through a variety of mediums such
as television, internet and mobile devices. HTN Video on Demand allows consumers to interact with the Real Estate community from
the convenience and comfort of home television. The market demographics for VOD are adults in the 24 to 54 age brackets. Not only
does VOD allow for brand exposure, VOD allows consumers to self-select relevant programming 24/7.



Realbiz patented technology is specifically
designed to work with cable and we arethe first company to produce and provide a video based content syndication
engine that drives far more real estate listing content and advertising to television and the internet, faster, in a more efficient
and less costly manner than anyone in the industry. Realbiz will have direct access to both the largest real estate
listing resource in the United States, Realtor.com. Realbiz completed multi-faceted long term agreement with Move.com/Realtor.com
which includes a revenue sharing program for its VOD product. The first city (Las Vegas) was launched in January 2013, as the
Realtor.com Channel.The Realtor.com Channel will be accessed through select cable and satellite providers in various markets,
which will include iTV (IPTV) and will have a companion web portal. Our partnership with RDC will support a joint mission to providing
innovative products that bring agents and the public together in a positive way. The companies are targeting growth into 180 cities
across the United States in the next 24 months.



A major opportunity for revenue will come
from advertisers who want to appeal to parties associated with the purchase and sale of a home. There are a myriad of potential
advertisers including Hardware Chains, Moving and Storage systems, Mortgage Lenders, Title and Escrow, etc. The key message points
for these advertisers are reach, frequency, interactivity, connectivity and scale.





10





With the introduction of the Home
Tour Network(HTN) Portal (targeted for launch in June 2013), it will allow consumers to connect with real estate and mortgage
professionals best suited to meet their needs. We are releasing a robust and unique video web portal where consumers can search
at a geo-local level, locate experts/professionals, and read and join communities. Our goal is provide consumers with free access
to real estate information. The plan is to provide this same information through mobile devices. The portal will continue to evolve
as more consumers, agents and advertisers join and use the HTN portal. The plan is allow real estate professionals to contribute
unique contents and use the social media community to make the portal more engaging and entertaining. We view the real estate
and related professionals as key components of the HTN portal.



To enhance our agent program we developed
and rolled out key improvements to our platforms in the second quarter of 2013 that greatly enhanced agents SEO/VSEO capabilities.The acquisition of YouTube by Google has presented not only challenges but new opportunities for search engine optimization.
As Realtors try to understand not only video marketing but how to best utilize and get top rankings on Google search, Realbiz
Media has developed a beta application that delivers the crucial elements of a SEO/VSEO strategy. The "Micro site" developed
in HTML5 combines a unique property URL with a YouTube embedded video supported by keywords, metatags, and back links. As Google
now indexes unique URLs with embedded video, the Micro site will deliver a powerful solution to the Real Estate Industry. The
Micro site automated enterprise solution can deliver leading Franchises such as ERA real estate with their core objectives: Increased
traffic to their websites and YouTube Channels combined with top search engine rankings for their members. We believe the Microsite
application will generate substantial revenues through enterprise deployments, current customer upgrades and new Agent/Broker
solutions



Real Estate On Demand -For the
real estate segment the Company plans to both market the approximately 120,000 “premium VOD TV listings” as well as
incorporating over 4.5 million MLS home listings from all major U.S. cities with video on demand and interactive capabilities
into a supporting real estate website. This new interactive solution will create direct referral fees, advertising fees and mortgage
financing for the Company. The Company recognizes that in the U.S. most consumers research the buying of a home through newspapers,
magazines, internet and TV. Only after the search has been narrowed down does the average consumer look to find a real estate
agent. The VOD solution allows the consumer to view, in high quality video, local listings and specialty properties (oceanfront
properties, mountain homes, farms, senior communities etc) via their TV with just a click of the remote control. This familiar
TV environment is especially targeted at the baby boomer and over 40 demographic who, in many cases, are more comfortable with
a remote control then they are with a mouse or touch screen. The real estate VOD solution is branded as Realtor.com channel. RealBiz
Media Approved Vendors Include: Century21, Coldwell Banker, ERA, Better Homes and Gardens, Sotheby’s, Keller Williams, Long
& Foster, Crye-Leike and others. Its desktop solution for virtual tours is used by over 30,000 real estate agents.







| | 2. | REALTOR.com PARTNERSHIP
| | -- | -----------------------



Realtor.com Partnership will greatly
enhance the Home Tour Network as produce will include the launch of a Video Portal with accompanying Widget and Mobile applications.In late May 2012, RealBiz Media signed a significant multiyear partnership with Move.com/ Realtor.com (RDC) that included
agreements to rebrand the network to “Realtor.com channel” and expand the network into 55 million households. Additionally
the Company has been commissioned to develop certain key projects including a real estate web portal to work in conjunction with
Realtor.com. While terms of the agreement are not yet fully released, some of the key elements include:



| | 1. | Expansion and rebranding of TV network to a National
                                                                       Video on Demand Network. Realbiz’s Home Tour Network
                                                                       will be rebranded to the Realtor.com Channel and expanded
                                                                       to 55 million households in 180 cities over the next 36
                                                                       months.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Introduction of a web portal to support Video on
                                                                       Demand Network including a National feed so listings are
                                                                       supported with video. Realbiz will provide all video estimated
                                                                       to be in excess of 2 million home listings per month.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Set up of “Widget Marketing Program”
                                                                       for the real estate agents currently working with Realtor.com.
                                                                       The program will be a multifaceted turnkey marketing tool
                                                                       for the real estate agent. Under the Realtor/Realbiz model
                                                                       the companies both embrace and promote real estate agents vs.
                                                                       the competition which tends to cannibalizing them.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Widget and Asset Video Player will
be a very powerful tool for agents and brokers in the real estate profession. These individual agents and small brokerages will
now be able to provide access to all the listings in the U.S. from a system that’s branded to them. This will significantly
extend their brand by allowing consumers to search for any property in the U.S. without having to leave that agent or broker’s
site. In fact these properties can be searched from social media locations, direct from email distribution and even from mobile
devices. This agent/broker branded “pocket search” capability will create more cohesion between the consumer and the
real estate professional.







11







This web of personalized search tools
will provide significant revenue opportunities for Move and RBM. Revenue streams exist in several layers within this system:



| | · | Video
                                                                                                               advertising insertion:
                                                                                                               Placement of video
                                                                                                               advertising as
                                                                                                               pre-roll to viewing
                                                                                                               a selected property
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Video
                                                                                                               sponsorship: Placement
                                                                                                               of an advertisers
                                                                                                               brand or logo with
                                                                                                               contact information
                                                                                                               placed in the video
                                                                                                               frame of the property
                                                                                                               videos
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Video
                                                                                                               player tab sponsorship:
                                                                                                               The Asset Video
                                                                                                               Player has functional
                                                                                                               tabs with relevant
                                                                                                               information for
                                                                                                               the home shopping
                                                                                                               consumer that can
                                                                                                               be sponsored (Mortgage,
                                                                                                               Credit Score)
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Advertiser
                                                                                                               discounts and promotions
                                                                                                               within the Asset
                                                                                                               Video Player: The
                                                                                                               player will have
                                                                                                               a tab for special
                                                                                                               offers which can
                                                                                                               be populated with
                                                                                                               local or national
                                                                                                               offers targeted
                                                                                                               to consumers in
                                                                                                               transition
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Agent/Broker
                                                                                                               Upgrades: Real
                                                                                                               Estate Professionals
                                                                                                               will be able to
                                                                                                               enhance their branding
                                                                                                               and information
                                                                                                               presentation as
                                                                                                               well as gather
                                                                                                               leads from the
                                                                                                               system with upgraded
                                                                                                               service offerings.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







Lastly, this system will create significant
organic SEO (Search Engine Optimization) and VSEO (Video Search Engine Optimization) lift for both the HTN companion portal and
Move. Since each property in the system (approximately 2.2 million) will be viewed as its own website the system will create millions
of back links to both Move and HTN. When you combine the back links with the fact that the content for these sites is in video
format and completely relevant to both the Move/Realtor.com site and the HTN portal, you have an incredibly powerful asset for
organic search ranking.



| | 3. | TRADITIONAL REAL ESTATE SALES POTENTIAL
| | -- | ---------------------------------------



Over the last year, home prices have increased
by 3.7% since May 2011, and that annual gain was the largest yearly increase in home prices since September 2006. It was also
the first time of four consecutive annual increases since the summer of 2007.



Realbiz has positioned itself to capture
revenues from this market through licensing itself in 19 states within the U.S. While it is not in its immediate plans the licenses
would allow it to capture commissions from foreclosure properties and real estate home sales.



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 cable, broadcast, and
broadband, web, print and mobile. The Company has launched real estate VOD channel starting with 2 cities on the Cox Communications
and Comcast Cable Network and is targeting in conjunction with RealBiz to reach over 50 million households with its “Home
Tour Network” by 2015.



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 fourth quarter of 2012.



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.



12











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, and mobile outlets. As we build our network, viewership and traffic, our reach and cross-promotion capabilities
will lead to the launching of additional targeted on demand solutions. Our involvement in cable TV, web and mobile 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.



In the real estate sector, internet sites
such as Trulia.com and Zillow.com as well as other internet sites providing real estate information to consumers provide opportunities
similar to our Realbiz products and services.



Other Competitors include Netflix, DVDs,
other VOD advertisers, Internet sellers of travel, and other real estate advertising.







Intellectual Property



In October 2012, the Company consummated
the share exchange with Webdigs and Realbiz 360 to create RealBiz. Realbiz had 28 patents on technology for the conversion of
pictures and text into video. The system can process large amounts of data in a very compressed period of time. The Company has
since made additional modifications and developed a MicroVideo App. It intends to add additional patents over the current year.



On October 29, 2008, the Company consummated
the transactions contemplated by a purchase agreement with the members of Loop. Loop 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 HPC. 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 completely
amortized at February 28, 2013.



As of February 29, 2012 the Company recognized
non cash impairments of $1,856,054 reducing the carrying values of the intangible assets for the R&R TV to $- 0-. This impairment
mainly related to the Company suspending distribution on Direct TV in March 2011.



Costs incurred in the development of our
website application and infrastructure is capitalized. Management placed the website into service during prior fiscal year, subject
to straight-line amortization over a three year period.



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.



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.



13







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 Programming



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 the age of 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.



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



As of June 13, 2013, the Company has nine
full-time employees: seven are located in the headquarter office; one is located in Nevada and one in Canada. The headquarters
staff is comprised of two senior management personnel 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.





14







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, 2013, we had $36,351 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 $71,193,862 and a working capital deficit of $13,371,094 at February 28, 2013, net losses for the year ended February
28, 2013 of $4,233,102 and cash used in operations during the year ended February 28, 2012 of $5,244,316. 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 $300,000, 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 $1 million to $5 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, 2013, we had approximately $14.6 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.



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, or equity, to fund our operations and repay our outstanding
debt for the foreseeable future. At February 28, 2013, we had $9.9 million of current 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 operate our video on demand business 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.





15









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.



We intend to launch new products in
a volatile market and we may be unsuccessful.



We intend to launch new products, which
include a television network 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 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 our products. 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.









16





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.





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;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | 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
                                                                                                              Financial Industry
                                                                                                              Regulatory Authority.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



17







The failure to adequately manage any growth
would adversely affect our business operations and financial results.



Mr. Kerby, Warren Kettlewell and Don
Monaco own approximately 95% of our voting securities which gives them significant influence over the affairs of our Company.



Bill Kerby (CEO), Warren Kettlewell (Director)
and Don Monaco (Director), collectively control approximately 95% of our voting securities which gives them voting control over
our Company. Bill Kerby, our Chief Executive Officer, owns 809,611 shares of Series A Preferred Stock; Warren Kettlewell a director
owns 331,403 shares of Series A Preferred stock; and Don Monaco a director owns 1,075,000 shares of Series A Preferred Stock.
Each share of Series A Preferred Stock is equal to 100 votes and votes on the same basis as the common stock. As a result Messrs.
Kerby, Kettlewell and Monaco collectively control approximately 95% of our voting securities, thereby giving them significant
influence in electing our directors and appointing management possibly delaying or preventing mergers or deals and suppressing
the 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 OTCBB, 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 OTCBB. 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. Also, due to a significant amount of issuances of our stock in a short period
of time, the Depository Trust Corporation has placed a temporary “chill” on new issuances which may further delay
the transfer of shares.



Existing stockholders may suffer substantial
dilution with future issuances of our common stock.



We may continue to issue a large amount
of securities or debt that can be converted into 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 6,495,778 outstanding warrants. Also, there are currently 2,366,014 shares
of the Company’s Series A Preferred Stock, which are convertible into shares of common stock at the lower of a) a conversion
of $0.50 per share or b) at the lowest price the corporation has issued stock as part of a financing. 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 and preferred 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 cash 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.

18







Our incorporation documents and Nevada law may 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.











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.



As an issuer of “penny
stock,” the protection provided by the federal securities laws relating to forward looking statements does not apply to
us.



Although federal securities
laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities
laws, this safe harbor is not available to issuers of penny stocks. As a result, the Company will not have the benefit of this
safe harbor protection in the event of any legal action based upon a claim that the material provided by the Company contained
a material misstatement of fact or was misleading in any material respect because of the Company’s failure to include any
statements necessary to make the statements not misleading. Such an action could hurt our financial condition.



Item 1B. Unresolved
Staff Comments



Not applicable.



Item 2. Properties



The Company leases approximately
6,500 square feet of office space pursuant to a lease agreement with Bednar Farms, Inc. located at 2690 Weston Road, Weston, Florida
33331. In accordance with the terms of the lease agreement, the Company is renting the commercial office space, for a term of
five years commencing January 1, 2011 through December 31, 2015. The rent for the year ending February 28, 2013 was $150,072.
The Company currently does not own any real property.



Item 3. Legal Proceedings



The Company is a
defendant in a lawsuit filed by Gari Media Group, Inc. in the United States District Court for the Central District of
California alleging that Next 1 owes $75,000 from a video and music production agreement provided for the Company’s
television network. The Company is vigorously defending the allegations and has made a settlement offer.



19







Item 4. Mine Safety
Disclosures



Not applicable.





PART
II



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



(a) Market Information



Our common stock currently
trades on the Over the Counter Bulletin Board under the ticker symbol “NXOI.” 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 of the past two
(2) fiscal years as follows:



|Period                              |  | High Price |        |  | Low Price |  
|----------------------------------- |  | ---------- | ------ |  | --------- | -
|Fiscal Year Ended February 29, 2012 |  |            |        |  |           |  
|First Quarter                       |  | $          | 0.2800 |  |           | $
|Second Quarter                      |  | $          | 0.1100 |  |           | $
|Third Quarter                       |  | $          | 0.0360 |  |           | $
|Fourth Quarter                      |  | $          | 0.0102 |  |           | $
|Fiscal Year Ended February 28, 2013 |  |            |        |  |           |  
|First Quarter                       |  | $          | 1.1500 |  |           | $
|Second Quarter                      |  | $          | 0.2390 |  |           | $
|Third Quarter                       |  | $          | 0.1450 |  |           | $
|Fourth Quarter                      |  | $          | 0.0490 |  |           | $



(b) Holders



These
quotations reflect interdealer prices, without retail markup, markdown, or commission and may not represent actual transactions.As of June 11, 2013, we had approximately 449 shareholders.



(c) Dividend Policy



The payment of cash dividends by us
is within the discretion of our board of directors and depends in part upon our earnings levels, capital requirements, financial
condition, any restrictive loan covenants, and other factors our board considers relevant. Since our inception, we have not declared
or paid any dividends on our common stock and we do not anticipate paying such dividends in the foreseeable future. We intend
to retain earnings, if any, to finance our operations and expansion.



(d) Securities Authorized for Issuance Under Equity Compensation
Plans



The following table sets forth, as of February 28, 2013, information
with regard to equity compensation plans (including individual compensation arrangements) under which our securities are authorized
for issuance:



|                                                       |  | Number of Securities to
    be issued upon exercise of outstanding options and
    rights
    (a) |     |  | Weighted average
    exercise prices of outstanding options and rights (b) |   |      | Number of securities remaining available
    for future issuances under equity
    compensation plans(excluding
    securities reflected
    in column (a)) (c) | 
|------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------- | --- |  | -------------------------------------------------------------------------- | - | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                       |  |                                                                                                   |     |  |                                                                            |   |      |                                                                                                                                                                 | 
|Equity compensation plans approved by stockholders     |  |                                                                                                   | 558 |  |                                                                            | $ | 7.25 |                                                                                                                                                                 | 
|Equity compensation plans not approved by stockholders |  |                                                                                                   | -0- |  |                                                                            | $ | -0-  |                                                                                                                                                                 | 
|                                                       |  |                                                                                                   | 558 |  |                                                                            | $ | 7.25 |                                                                                                                                                                 | 





20









Transfer Agent



Our stock transfer agent is American Stock Transfer Co. (“AST”),
6201 15th Avenue, Brooklyn, NY 11219. AST’s telephone number in the U.S. is (718) 921-8124 and their internet
address is www.amstock.com.



Rule 10B-18 Transactions



During the year ended February 28, 2013, there were no repurchases
of the Company’s common stock by Next 1.



Recent Issuances of Unregistered Securities

During the fiscal year ended February
28, 2013, we have issued the following securities which were not registered under the Securities Act and not previously disclosed
in the Company’s Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. Unless otherwise indicated, all of the share
issuances described below were made in reliance on the exemption from registration provided by Section 4(2) of the Securities
Act for transactions not involving a public offering:



Common Stock



During the year ended February 28, 2013,
the Company:



| | · | issued
                                                                                                               385,734 shares
                                                                                                               of common stock
                                                                                                               and 733,400 one
                                                                                                               (1) to two (2)
                                                                                                               warrants with an
                                                                                                               exercise price
                                                                                                               of $.001 to $1
                                                                                                               in exchange for
                                                                                                               services rendered,
                                                                                                               consisting of financing
                                                                                                               and consulting
                                                                                                               fees incurred in
                                                                                                               raising capital,
                                                                                                               valued at $54,763.
                                                                                                               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. The
                                                                                                               value of the warrants
                                                                                                               was estimated at
                                                                                                               date of grant using
                                                                                                               Black-Scholes option
                                                                                                               pricing model with
                                                                                                               the following assumptions:
                                                                                                               risk free interest
                                                                                                               rate 0.16% to 0.23$,
                                                                                                               dividend yield
                                                                                                               of -0-%, volatility
                                                                                                               factor of 287.30%
                                                                                                               to 396.95 and expected
                                                                                                               life of 1 to 2
                                                                                                               years.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               11,442,205 shares
                                                                                                               of common stock
                                                                                                               valued at $681,792
                                                                                                               to holders of convertible
                                                                                                               promissory notes
                                                                                                               upon the exercise
                                                                                                               of their right
                                                                                                               to convert any
                                                                                                               part of the outstanding
                                                                                                               interest or principal,
                                                                                                               incurring $99,100
                                                                                                               penalties for tardy
                                                                                                               conversions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Preferred Series A



During the year ended February 28, 2013,
the Company:



| | · | issued
                                                                                                               75,000 shares of
                                                                                                               Preferred Series
                                                                                                               A Stock at $1 per
                                                                                                               share and received
                                                                                                               $75,000 in proceeds.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               481,403 shares
                                                                                                               of Preferred Series
                                                                                                               A Stock valued
                                                                                                               at $481,403 and
                                                                                                               induced a related
                                                                                                               party shareholder
                                                                                                               to convert $112,247
                                                                                                               of convertible
                                                                                                               promissory notes
                                                                                                               principal and interest,
                                                                                                               $85,000 of shareholder
                                                                                                               loans.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Preferred Series B



During the year ended February 28, 2013,
the Company:



| | · | entered
                                                                                                               into stock subscription
                                                                                                               agreements and
                                                                                                               issued 364,600
                                                                                                               shares of Preferred
                                                                                                               Series B Stock
                                                                                                               at $5 per share
                                                                                                               and 1,630,250 one
                                                                                                               (1) to five (5)
                                                                                                               year common stock
                                                                                                               warrants with an
                                                                                                               exercise price
                                                                                                               of $0.02 to $2.50
                                                                                                               and received $1,692,728
                                                                                                               in proceeds, net
                                                                                                               of $272 of bank
                                                                                                               charges plus $130,000
                                                                                                               received in the
                                                                                                               prior year ended
                                                                                                               February 29, 2012
                                                                                                               with a total value
                                                                                                               of $1,823,000.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | entered
                                                                                                               into Preferred
                                                                                                               Series B Stock
                                                                                                               subscription agreements
                                                                                                               and issued 51,600
                                                                                                               shares in exchange
                                                                                                               for services rendered,
                                                                                                               consisting of financing
                                                                                                               and consulting
                                                                                                               fees incurred in
                                                                                                               raising capital,
                                                                                                               valued at $258,000.
                                                                                                               The value of the
                                                                                                               preferred stock
                                                                                                               issued is 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.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Preferred Series C



During the year ended February 28, 2013,
the Company:



| | · | entered
                                                                                                               into stock subscription
                                                                                                               agreements and
                                                                                                               issued 10,000 shares
                                                                                                               of Preferred Series
                                                                                                               C Stock at $5 per
                                                                                                               share and received
                                                                                                               $50,000 in proceeds.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | entered
                                                                                                               into Preferred
                                                                                                               Series C Stock
                                                                                                               subscription agreements
                                                                                                               and issued 26,000
                                                                                                               shares in exchange
                                                                                                               for services rendered,
                                                                                                               consisting of financing
                                                                                                               and consulting
                                                                                                               fees incurred in
                                                                                                               raising capital,
                                                                                                               valued at $130,000.
                                                                                                               The value of the
                                                                                                               preferred 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.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





21







Preferred Series D



During the year ended February 28, 2013, the Company:



| | · | entered
                                                                                                               into stock subscription
                                                                                                               agreements and
                                                                                                               issued 372,700
                                                                                                               shares of Preferred
                                                                                                               Series D Stock
                                                                                                               at $5 per share
                                                                                                               and 1,980,500 one
                                                                                                               (1) and four (4)
                                                                                                               year common stock
                                                                                                               warrants with an
                                                                                                               exercise prices
                                                                                                               of $0.03 to $0.10
                                                                                                               and received $1,862,656
                                                                                                               in proceeds, net
                                                                                                               of $844 of bank
                                                                                                               charge with a total
                                                                                                               value of $1,863,500.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               158,648 shares
                                                                                                               of Preferred Series
                                                                                                               D Stock and 103,200
                                                                                                               one (1) to four
                                                                                                               (4) warrants with
                                                                                                               an exercise price
                                                                                                               of $.03 to $25
                                                                                                               in exchange for
                                                                                                               services rendered,
                                                                                                               consisting of financing
                                                                                                               and consulting
                                                                                                               fees incurred in
                                                                                                               raising capital,
                                                                                                               valued at $794,134.
                                                                                                               The value of the
                                                                                                               preferred 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. The
                                                                                                               value of the warrants
                                                                                                               was estimated at
                                                                                                               date of grant using
                                                                                                               Black-Scholes option
                                                                                                               pricing model with
                                                                                                               the following assumptions:
                                                                                                               risk free interest
                                                                                                               rate 0.15% to 0.36,
                                                                                                               dividend yield
                                                                                                               of -0-%, volatility
                                                                                                               factor of 342.90%
                                                                                                               to 346.22% and
                                                                                                               expected life of
                                                                                                               1 to 4 years.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               185,129 shares
                                                                                                               of Preferred Series
                                                                                                               D Stock valued
                                                                                                               at $925,647 and
                                                                                                               induced noteholders
                                                                                                               to convert $865,662
                                                                                                               of convertible
                                                                                                               promissory notes
                                                                                                               principal.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               32,000 shares of
                                                                                                               Preferred Series
                                                                                                               D Stock valued
                                                                                                               at $160,000 for
                                                                                                               the conversion
                                                                                                               of shareholder
                                                                                                               loans.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               3,600 shares of
                                                                                                               Preferred Series
                                                                                                               D Stock valued
                                                                                                               at $18,000 for
                                                                                                               the conversion
                                                                                                               of accounts payable.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               380,000 shares
                                                                                                               valued at $1,900,000
                                                                                                               as part of the
                                                                                                               agreement of October
                                                                                                               2, 2012 for the
                                                                                                               purchase of 664.1
                                                                                                               shares of Real
                                                                                                               Biz Holdings, Inc.
                                                                                                               Additionally, the
                                                                                                               Company recorded
                                                                                                               a derivative liability
                                                                                                               valued at $35,733
                                                                                                               as the purchase
                                                                                                               agreement includes
                                                                                                               a "ratchet"
                                                                                                               provision. The
                                                                                                               fair value of the
                                                                                                               "ratchet"
                                                                                                               provision was estimated
                                                                                                               at the date of
                                                                                                               grant using the
                                                                                                               Black-Scholes option-pricing
                                                                                                               model with the
                                                                                                               following assumptions:
                                                                                                               risk-free interest
                                                                                                               rate of 0.29%,
                                                                                                               dividend yield
                                                                                                               of -0-%, volatility
                                                                                                               factor of 395.51%
                                                                                                               and expected life
                                                                                                               of 2 years.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               stock subscription
                                                                                                               agreements for
                                                                                                               20,000 shares of
                                                                                                               Preferred Series
                                                                                                               D Stock.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item 6. Selected Financial
Data



Not applicable.





22







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



THE FOLLOWING DISCUSSION OF OUR RESULTS
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.



Recent Acquisitions



On October 3, 2012, the Company entered
a securities exchange agreement and exercised the option purchase agreement to purchase 664.1 common shares of Real Biz Holdings,
Inc. The Company applied $300,000 of cash, issued a Series D Preferred stock subscription agreement for 380,000 shares and agreed
to a $50,000 thirty day (30) day post-closing final buyout bringing the total value of the agreement to $2,250,000.





The Company accounted for the acquisition
utilizing the purchase method of accounting in accordance with ASC 805 "Business Combinations". The Company is the acquirer
for accounting purposes and Real Biz Holdings, Inc. is the acquired Company. Accordingly, the Company applied push-down accounting
and adjusted to fair value all of the assets and liabilities directly on the financial statements of the subsidiary, Real Biz
Holdings, Inc.



The net purchase price, including acquisition
costs paid by the Company, was allocated to assets acquired and liabilities assumed on the records of the Company as follows:



|Cash                                                                |  | $ | 34,366    | 
|------------------------------------------------------------------- |  | - | --------- | 
|Other current assets                                                |  |   | 40,696    | 
|Intangible asset                                                    |  |   | 4,796,178 | 
|                                                                    |  |   | 4,871,240 | 
|                                                                    |  |   |           | 
|Accounts payable, accrued expenses and other miscellaneous payables |  |   | 2,330,846 | 
|Deferred revenue                                                    |  |   | 48,569    | 
|Convertible notes payable to officer                                |  |   | 241,825   | 
|                                                                    |  |   | 2,621,240 | 
|Net purchase price                                                  |  | $ | 2,250,000 | 







23





On October 9, 2012, Next 1
and RealBiz Media Group, Inc., formerly known as Webdigs,
Inc. (“Webdigs”), completed the transactions contemplated by that certain Share Exchange Agreement entered into
on April 4, 2012 (the “Exchange Agreement”). Under the Exchange Agreement, our Company exchanged with Webdigs all
of the outstanding equity in Attaché Travel International, Inc., a Florida corporation and wholly owned subsidiary of
Next 1 (“Attaché”). Attaché owns approximately 85% of a corporation named RealBiz Holdings Inc.
which is the parent corporation of RealBiz360, Inc. (“RealBiz”). RealBiz is a real estate media services company
whose proprietary video processing technology has made it one of the leaders in providing home virtual tours to the real
estate industry. In exchange for our Attaché shares, our Company received a total of 93 million shares of newly
designated Series A Convertible Preferred Stock (“Webdigs Series A Stock”). The exchange of Attaché shares
in exchange for Webdigs Series A Stock is referred to as the “Exchange Transaction.”



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.





24







RESULTS OF OPERATIONS



Results of Operations for the Fiscal
Year Ended February 28, 2013 Compared to the Fiscal Year Ended February 29, 2012



Revenues.Our total
revenues decreased 24% to $987,115 for the fiscal year ended February 28, 2013, compared to $1,292,517 for the fiscal year
ended February 29, 2012, a decrease of $305,402. The decrease is due to the R & R television network being off of Direct
TV, offset by revenue generated from RealBiz Media Group, Inc.



Revenues from the travel segment decreased
36% to $550,367 for the fiscal year ended February 28, 2013, compared to $865,878 for the fiscal year ended February 29, 2012,
a decrease of $315,511. Travel revenue is generated from its luxury tour operation which provides escorted and independent tours
worldwide to upscale travelers. The decrease is due to the decline in tours and cruises sold.



Revenues from advertising increased 2% to $436,748 for the fiscal year ended February 28, 2013, compared to $462,639 for the
fiscal year ended February 29, 2012, an increase of $10,109. Advertising revenue is currently generated from RealBiz Media
Group, Inc.’s real estate advertising and in prior years was generated from the sale of advertising time on R&RTV
through selling time for commercial announcements on Direct TV which was discontinued in the prior fiscal year.



Cost of revenues.Cost
of revenues decreased 86% to $501,460 for fiscal year ended February 28, 2013, compared to $3,558,714 for the fiscal year
ended February 29, 2012, a decrease of $3,057,254. The decrease in cost is primarily due to the network being off Direct
TV.



Operating expenses.Our
operating expenses include salaries and benefits, selling and promotion, general and administrative: finance fees incurred in
raising capital, amortization of intangibles, legal and accounting fees, consulting fees and miscellaneous operating expenses.
Our total operating expenses decreased 9% to $5,315,808 for the fiscal year ended February 28, 2013 from $5,861,585 for the fiscal
year ended February 29, 2012, a decrease of $545,777.The decrease was primarily due to a decrease in finance fees of $5,818, amortization
of intangibles of $1,154,759 and legal and accounting of $81,531; offset by an increase in salaries and benefits of $100,116,consulting
fees of $49,144 and miscellaneous operating expenses of $547,071.



Other expense.Interest
expense decreased 75% to $1,774,792 for the fiscal year ended February 28, 2013, compared to $7,060,814 for the fiscal year ended
February 29, 2012, a decrease of $5,286,022 primarily due to the increase in the amount of debt converted into common and preferred
shares and significant reductions in the issuance of convertible promissory notes over the prior fiscal year. Loss on settlement
of debt conversions increased 20% to 309,201 for the fiscal year ended February 28, 2013, compared to $258,443 for the fiscal
year ended February 29, 2012, an increase of $50,758 primarily due to the increase in the settlement of convertible promissory
notes and shareholder loans converted into common and preferred shares. Gain in the change in fair value of derivative decreased
6% to $2,081,029 for the fiscal year ended February 28, 2013, compared to $2,223,649 for the fiscal year ended February 29, 2012,
a decrease of $142,620 primarily due to the increase in the conversion of convertible promissory notes with embedded variable
conversion features. A loss on impairment of intangible assets decreased 100% to $-0- for the fiscal year ended February 28, 2013
compared to $1,856,054 for the fiscal year ended February 29, 2012, a decrease of $1,856,054 primarily due to no requirement to
impair intangible assets in the current fiscal year. A gain on legal settlement decreased 54% to $701,026 for the fiscal year
ended February 28, 2013 compared to $1,520,529 for the fiscal year ended February 29, 2012 a decrease of $819,503 primarily due
to the decrease in the amount of legal settlements executed during the current fiscal year with vendors. Other expense increased
10% to $101,011 for the fiscal year ended February 28, 2013, compared to $92,151 for the fiscal year ended February 28, 2011 an
increase of $8,860 primarily due to the increase in penalties assessed by convertible promissory notes holders requesting to convert
principal into equity securities not executed in a timely manner.



Net Loss. We had a net loss
of $4,233,102 for the fiscal year ended February 28, 2013 compared to a net loss of $13,651,066 for the fiscal year ended February
29, 2012 a decrease of $9,417,964 primarily due to the television network being off during the year, reducing labor and production
costs. See the discussions on cost of revenues and operating expenses and the notes to the consolidated financial statements included
in this Annual Report.



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



|              |  | Current |         |  | Long-Term |   |         |                   | 
|------------- |  | ------- | ------- |  | --------- | - | ------- | ----------------- | 
|              |  | FY2014  |         |  | FY2015    |   |         | FY2016 and beyond | 
|Carriage Fees |  | $       | -0-     |  |           | $ | -0-     |                   | 
|Consulting    |  |         | 83,090  |  |           |   | 47,090  |                   | 
|Leases        |  |         | 135,233 |  |           |   | 138,475 |                   | 
|Other         |  |         | 167,604 |  |           |   | 167,604 |                   | 
|Totals        |  | $       | 385,927 |  |           | $ | 353,169 |                   | 



Liquidity and Capital Resources; Going
Concern



At February 28, 2013, the Company had
$36,351 cash on-hand, an increase of $23,362 from $12,989 at the start of fiscal 2012. The increase in cash was primarily due
to the funds raised by issuance of various series of the Company’s Preferred stock series over the Company’s obligation
of meeting day-to-day operating expenses, promissory note obligations and compliance with terms under an option agreement.





25







Net cash used by operations was $5,244,316
for the year ended February 28, 2013, an increase of $421,893 from $4,822,423 used during fiscal 2012. The increase was due to
the Company’s ability to satisfy its accounts payable and other current liabilities through payment in cash and settlement
of past due amounts using equity securities.



Net cash used in investing activities
decreased $305,000 to $-0- for the year ended February 28, 2013 compared to $305,000 for fiscal 2012. The decrease is attributable
to the exercise of the option agreement to purchase shares of Real Biz Holdings, Inc.



Net cash provided by financing activities was increased $547,083
to $5,267,678 for the year ended February 28, 2013 compared to $4,720,595 fiscal 2012, The increase is attributable to the increase
in proceeds of stock issuances and notes payable over conversions and principal payments.



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 our Video on Demand real estate and travel
business and 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 $1 million to $5 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.



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 less than
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 $300,000. We expect the monthly cash burn rate will gradually increase to approximately
$1.0 million, with the expectation of profitability by the fourth quarter of fiscal 2013.



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.



Significant Accounting Policies



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 consolidated 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 consolidated
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.





26









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.



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. As of February 28, 2013, the Company had no 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 Other Intangible Assets



In accordance with ASC 350-30-65 “Goodwill
and Other Intangible Assets, the Company assesses the impairment of identifiable intangible whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Factors the Company considers to be important which could trigger an
impairment review include the following:



| | 1. | Significant underperformance
                                                                               to expect historical or project future operating
                                                                               results;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Significant changes
                                                                               in the manner or use of the acquired assets or
                                                                               the strategy for the overall business; and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Significant negative
                                                                               industry or economic trends.
| | -- | --------------------------------------------------------------------------------------------------------------------------------



The Company incurs an impairment charge
when the Company determines if the carrying value of an intangible may not be recoverable based upon the existence of one or more
of the above indicator of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash
flow. The Company measures any impairment based on a project discounted cash flow method using a discount rate determined by management
to be commensurate with the risk inherent to the current business model. Significant management judgment is required in determining
whether an indicator of impairment exists and in projecting cash flows. The Company evaluated the remaining useful life of the
intangibles and recorded a loss on impairment of intangible assets during the years ended February 28, 2013 and February 29, 2012
of $-0- and $1,856,054, respectively.



Intellectual properties that have finite
useful lives are amortized over their useful lives. The amortization expense for the years ended February 28, 2013 and February
29, 2012 was $604,008 and $1,222,861, respectively.



Convertible Debt Instruments



The Company records debt net of debt discount
for beneficial conversion features and warrants, on a relative fair value basis. Beneficial conversion features are recorded pursuant
to the Beneficial Conversion and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants
and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital. Debt discount is amortized to
interest expense over the life of the debt.



Derivative Instruments



The Company enters into financing arrangements
that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company
accounts for these arrangements in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments
and Hedging Activities (“ASC 815”) as well as related interpretation of this standard. In accordance with this standard,
derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with
gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are
bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company
determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation
models, giving consideration to all of the rights and obligations of each instrument.



27









We estimate fair values of derivative
financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective
measuring fair values. In selecting the appropriate technique, we consider, among other factors, the nature of the instrument,
the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing
warrants, we generally use the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite
assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments.
Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that
may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors.
In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading
market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values,
our income (expense) going forward will reflect the volatility in these estimates and assumption changes. Under the terms of the
new accounting standard, increases in the trading price of the Company’s common stock and increases in fair value during
a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price
of the Company’s common stock and decreases in trading fair value during a given financial quarter result in the application
of non-cash derivative income.



Earnings per Share



Basic earnings per share is computed by
dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per
share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and
potentially dilutive securities outstanding during each period. Diluted loss per common share is not presented because it is anti-dilutive.
The Company’s common stock equivalents include the following:



|                                                                      |  | February 28, 2013 |            |  | February 29, 2012 | 
|--------------------------------------------------------------------- |  | ----------------- | ---------- |  | ----------------- | 
|Series A convertible preferred stock issued and outstanding           |  |                   | 2,366,014  |  |                   | 
|Series B convertible preferred stock issued and outstanding           |  |                   | 2,138,000  |  |                   | 
|Series C convertible preferred stock issued and outstanding           |  |                   | 180,000    |  |                   | 
|Series D convertible preferred stock issued and outstanding           |  |                   | 5,660,385  |  |                   | 
|Warrants to purchase common stock issued, outstanding and exercisable |  |                   | 6,495,778  |  |                   | 
|Stock options issued, outstanding and exercisable                     |  |                   | 4,050      |  |                   | 
|Series D convertible preferred subscribed                             |  |                   | 100,000    |  |                   | 
|Shares on convertible promissory notes                                |  |                   | 32,133,155 |  |                   | 
|                                                                      |  |                   | 49,077,382 |  |                   | 



Revenue Recognition



Barter



Barter transactions represent the exchange
of advertising or programming for advertising, merchandise or services. Barter transactions which exchange advertising for advertising
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.



Barter transactions which exchange advertising
or programming for merchandise or services are recorded at the monetary value of the revenue expected to be realized from the
ultimate disposition of merchandise or services. Expenses incurred in broadcasting barter provided are recorded when the program,
merchandise or service is utilized.



Barter revenue of $-0-  has been recognized for the years ended February 28, 2013 and February 29, 2012, respectively. Barter expense of
$-0-  has been recognized for the years ended February 28, 2013 and February 29, 2012.



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.



28









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 Promotion



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.



Advertising Expense



Advertising costs are charged to expense
as incurred and are included in selling and promotions expense in the accompanying consolidated financial statements. Advertising
expense for the years ended February 28, 2013 and February 29, 2012 was $131,504 and $55,551.



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 consolidated 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.





29







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
consolidated 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. See footnote 16 for fair value measurements.



Reclassifications



Certain amounts previously reported in
the fiscal year ended February 29, 2012 have been reclassified to conform to the classifications used in the year ended February
28, 2013. Such reclassifications have no effect on the reported net loss.



Recent Accounting Pronouncements



In July 2012,
the Financial Accounting Standards Board (FASB) amended ASC 350, “ Intangibles — Goodwill and Other”.
This amendment is intended to simplify how an entity tests indefinite-lived assets other than goodwill for impairment by providing
entities with an option to perform a qualitative assessment to determine whether further impairment testing is necessary. The
amended provisions will be effective for the Company beginning in the first quarter of 2014, and early adoption is permitted.
This amendment impacts impairment testing steps only, and therefore adoption will not have an impact on the Company’s consolidated
financial position, results of operations or cash flows.



In August 2012,
the FASB issued Accounting Standards Update (“ASU”) 2012-03, “Technical Amendments and Corrections to SEC Sections:
Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release
No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update
No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is
not expected to have a material impact on financial position or results of operations of the Company.



In October 2012,
the FASB issued ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04 ("ASU
2012-04"). The amendments in this update cover a wide range of topics in the Accounting Standards Codification. These amendments
include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair
value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The
adoption of ASU 2012-04 is not expected to have a material impact on financial position or results of operations of the Company.



In February 2013,
the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive (ASU 2013-02). This
guidance is the culmination of the FASB’s deliberation on reporting reclassification adjustments from accumulated other
comprehensive income (AOCT). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or
other comprehensive income. However, the amendments required disclosure of amounts reclassified out of AOCI in its entirety, by
component, on the face of the statement of operations or in the notes thereto. Amounts that are not required to be reclassified
in their entirety to net income must be cross referenced to other disclosure that provides additional detail. This standard is
effective prospectively for annual and interim reporting periods beginning after December 15, 2012. The adoption of ASU 201-02
is not expected to have a material impact on financial position or results of operations of the Company.



30









Management does not believe that any other
recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying
consolidated financial statements.



Item 7A. Quantitative and Qualitative
Disclosures about Market Risk



Not applicable.



Item 8. Financial Statements and Supplementary
Data.



Our consolidated financial statements
are contained in pages F-1 through F-42 which appear at the end of this annual report.





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



None.



Item 9A. Controls and Procedures



a) Evaluation of Disclosure and Control 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, 2013. 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, 2013. 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, 2013, management assessed
the effectiveness of 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, 2013
and that material weaknesses in ICFR existed as more fully described below.





31







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, 2013:



| | • | The Company does not have
                                                                    an independent audit committee or audit committee financial
                                                                    expert. 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
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, 2013 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 and biographical summaries
set forth information, including principal occupation and business experience, about our directors and executive officers at June
11, 2013. The terms of all the directors, as identified below, will run until their successors are elected and qualified.



|Name              |  | Age |  | Position                             |  | Officer and/or
        Director Since
|----------------- |  | --- |  | ------------------------------------ |  | -------------------------------------
|William Kerby     |  | 56  |  | Chief Executive Officer and Chairman |  | 2008                                 
|Adam Friedman     |  | 48  |  | Chief Financial Officer              |  | 2010                                 
|Warren Kettlewell |  | 67  |  | Director                             |  | 2011                                 
|Pat LaVecchia     |  | 46  |  | Director                             |  | 2011                                 
|Don Monaco        |  | 60  |  | Director                             |  | 2012                                 
|Phil Bliss        |  | 65  |  | Director                             |  | 2012                                 
|Doug Checkeris    |  | 58  |  | Director                             |  | 2012                                 



Management and Director Biographies:



William Kerby – Chief Executive
Officer and Chairman



William Kerby, age 56 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 managed Travelbyus,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 the Travelbyusmodel. 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.









32















Adam Friedman –
Chief Financial Officer



On August 16, 2010, the board of directors
of the Company appointed Adam Friedman, age 48, to the position of Chief Financial Officer of the Company. Under the terms of
his three-year employment agreement expiring on August 15, 2013, Mr. Friedman has agreed to devote all of his time, attention,
and ability to the business of the Company. From February 2006 to July 2010, Mr. Friedman previously served as Chief Financial
Officer, Corporate Secretary, and Controller for MDwerks, Inc. (“MDwerks”) where his responsibilities included overseeing
the Company’s finances, human resources department, U.S. Securities & Exchange Commission compliance, and Sarbanes-Oxley
compliance. Prior to joining MDwerks, Mr. Friedman served as the Vice President of Finance for CSA Marketing, Inc. from March
2005 to February 2006. For the eleven years prior to March 2005, Mr. Friedman served as the Business Manager/Controller and Director
of Financial Planning at the GE/NBC/Telemundo Group, Inc. Mr. Friedman also worked as a Senior Financial Analyst for Knight-Ridder,
Inc and as an Audit Senior Accountant for KPMG Peat Marwick. Mr. Friedman received his MBA from St. Thomas University and his
BSM from Tulane University.



Warren Kettlewell –
Director



On January 12, 2011, the board of directors
appointed Warren Kettlewell, age 67, to the board of directors of the Company. A description of Mr. Kettle well’s relevant
business experience is detailed below. Prior to joining the Company’s board of directors, Mr. Kettlewell was an active investor
of the Company for the prior five years. Mr. Kettlewell is currently the President and Chief Executive Officer of Cardar Investments
Limited, a privately owned investment company involved in real estate development (“Cardar”). Mr. Kettlewell has held
these respective positions at Cardar since founding the company in 1983. Additionally, since 1990, Mr. Kettlewell has been active
shareholder in and advisor to Cango Petroleum, Inc., a company in the business of owning and operating independent retail gas
stations in Canada. The Company believes that the addition of Mr. Kettlewell to the board of directors will enhance the board
with his business and real estate industry experience.





Pat LaVecchia – Director



On April 15, 2011, the board of directors appointed Pat LaVecchia, age 46, to the board of directors of the Company. A description
of Mr. LaVecchia’s relevant business experience is detailed below. Mr. LaVecchia has been a founding principal and Managing
Partner of LaVecchia Capital LLC (“LaVecchia Capital”), a merchant banking and investment firm, since 2007 and
has over 20 years of experience in the financial industry. Mr. LaVecchia has built and run several major Wall Street groups
and has extensive expertise in capital markets, including initial public offerings, secondary offerings, raising capital for
private companies and PIPEs as well as playing the leading role in numerous mergers, acquisitions, private placements and
high yield transactions. Prior to forming LaVecchia Capital, Mr. LaVecchia ran several groups at major firms including: Managing
Director and Head of the Private Equity Placement Group at Bear, Stearns & Company (1994 to 1997); Group Head of Global
Private Corporate Equity Placements at Credit Suisse First Boston (1997 to 2000); Managing Director and Group Head of the
Private Finance and Sponsors Group at Legg Mason Wood Walker, Inc (2001 to 2003); co-founder and Managing Partner of Viant
Group (2003-2005) and Managing Director and Head of Capital Markets at FTN Midwest Securities Corp. (2005 to 2007). Mr. LaVecchia
received his B.A., magna cum laude (and elected to Phi Beta Kappa), from Clark University and an M.B.A. from The Wharton School
of the University of Pennsylvania with a major in Finance and a concentration in Strategic Planning. In the past, Mr. LaVecchia
has served on several public company boards, including as Vice Chairman of InfuSystems, Inc. (INFU). Mr. LaVecchia also currently
serves as co-chairman of Premiere Opportunities Group, Inc. (PPBL, OTC) and managing partner of Sapphire Capital Partners.
Mr. LaVecchia also sits on several advisory boards and non-profit boards. The Company believes that Mr. LaVecchia’s
investment banking and business experience allows him to contribute business and financing expertise and qualifies him to
be a member of the Board.



Don Monaco  –
Director



On August 26, 2011, Next 1 (the “Company”)
appointed Don Monaco, age 60, as a member of its Board of Directors. Mr. Monaco is the principal owner of Monaco Air Duluth, LLC,
a full service, fixed-base operator aviation services business at Duluth International Airport serving airline, military and general
aviation customers. Mr. Monaco previously spent 28 years as an international information technology and business management consultant
with Accenture in Chicago, Illinois including 18 years as a partner and senior executive. The Company believes that Mr. Monaco’s
senior management experience qualifies him to be a member of the Board.



Doug Checkeris –
Director



On December
21, 2012, the Company appointed Doug Checkeris, 58, as a member of its Board of Directors. Mr. Checkeris is a Senior Media and
Advertising Executive with nearly three decades of hands-on management in all facets of interactive media. Doug’s work experience
includes 14 years of service with Mediacom where he rose through the ranks to become the CEO for Mediacom North America, until
recently headquartered in New York. With close to $18 billion in global billings, 4,600 employees, and 116 offices in 89 countries,
Mediacom provides and specializes in business-building media solutions for some of the world’s largest, well-known advertisers.
Previous to Mediacom, Doug started his career in a media company in Toronto, Canada, and was a partner when the company was acquired
by Grey Worldwide and the WPP.













33











Philip
                                                                                        Bliss – Director



On December
21, 2012, the Company appointed Phil Bliss, 65, as its Chief Information Officer and a member of its Board of Directors. Mr. Bliss
is a digital marketing pioneer who has been at the forefront of digital media development for the past twenty years .
Mr. Bliss provides marketing, product and technology leadership, as well as providing strategy, development and marketing expertise
to companies that want to leverage their digital assets. Mr. Bliss has built and sold four companies and been a strategic advisor,
product marketer and director to many start-ups in the technology sector. In the last seventeen years he has built, managed or
launched hundreds of web sites, built and marketed twelve products and consulted with numerous large and small organizations on
their technology products and web strategies. Over the past six years he has built a number of new products and process for the
Higher Education sector and consulted with many universities and colleges through their web renewal activities. His national
and international track record includes many technology, educational, non-profit, and American Indian companies including the
Smithsonian Institution, University of Toronto, Brock University, Microsoft, NEC, Samsung, and Cisco Systems.



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.



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.



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, 2013, were timely.



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, 2013 and February 29, 2012



|Name and principal
    position   |  | FiscalYearEnded |  |  | Salary |         |  | Bonus |   |   | StockAwards |  |   | OptionAwards |  |  | Non-EquityIncentive PlanCompensation |       |  | NonqualifiedDeferredCompensationEarnings |   |   | AllOtherCompensation |  |   | Total | 
|--------------------------------- |  | --------------- |  |  | ------ | ------- |  | ----- | - | - | ----------- |  | - | ------------ |  |  | ------------------------------------ | ----- |  | ---------------------------------------- | - | - | -------------------- |  | - | ----- | 
|William Kerby                     |  | 2013            |  |  | $      | 300,000 |  |       | $ | 0 |             |  | $ | 0            |  |  | $                                    | 0     |  |                                          | $ | 0 |                      |  | $ | 0     | 
|CEO and Chairman of the Board (1) |  | 2012            |  |  | $      | 300,000 |  |       | $ | 0 |             |  | $ | 0            |  |  | $                                    | 5,800 |  |                                          | $ | 0 |                      |  | $ | 0     | 
|                                  |  | 2011            |  |  | $      | 300,000 |  |       | $ | 0 |             |  | $ | 0            |  |  | $                                    | 0     |  |                                          | $ | 0 |                      |  | $ | 0     | 
|                                  |  |                 |  |  |        |         |  |       |   |   |             |  |   |              |  |  |                                      |       |  |                                          |   |   |                      |  |   |       | 
|Adam Friedman                     |  | 2013            |  |  | $      | 150,000 |  |       | $ | 0 |             |  | $ | 0            |  |  | $                                    | 0     |  |                                          | $ | 0 |                      |  | $ | 0     | 
|CFO (2)                           |  | 2012            |  |  | $      | 150,000 |  |       | $ | 0 |             |  | $ | 0            |  |  | $                                    | 5,800 |  |                                          | $ | 0 |                      |  | $ | 0     | 
|                                  |  | 2011            |  |  | $      | 68,750  |  |       | $ | 0 |             |  | $ | 0            |  |  | $                                    | 0     |  |                                          | $ | 0 |                      |  | $ | 0     | 



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



| | (2) | Adam Friedman receives an annual base salary of $150,000.
| | --- | ---------------------------------------------------------





34











Outstanding Equity Awards at Fiscal
Year-End



The following table sets forth information for the named executive
officers regarding the number of shares subject to both exercisable and unexercisable stock options and restricted stock, as well
as the exercise prices and expiration dates thereof, as of February 28, 2013:



|Name and principal
    position |  | Number
    ofSecuritiesUnderlyingUnexercisedOptionsExercisable |     |  | Number
    ofSecuritiesUnderlyingUnexercisedOptionsUn-exercisable |  |   | EquityIncentivePlanAwards:Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions |  |  | OptionExercisePrice |  |  | OptionExpirationDate
|------------------------------- |  | -------------------------------------------------------------- | --- |  | ----------------------------------------------------------------- |  | - | --------------------------------------------------------------------------------- |  |  | ------------------- |  |  | --------------------
|William Kerby, CEO              |  |                                                                | 800 |  |                                                                   |  | 0 |                                                                                   |  |  | -0-                 |  |  | $                   
|                                |  |                                                                |     |  |                                                                   |  |   |                                                                                   |  |  |                     |  |  |                     
|Adam Friedman, CFO              |  |                                                                | 800 |  |                                                                   |  | 0 |                                                                                   |  |  | -0-                 |  |  | $                   





Employment Agreements



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



William Kerby



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.



Adam Friedman



Adam Friedman has an employment agreement,
dated August 16, 2010, with the Company. Mr. Friedman is employed as the Chief Financial Officer of the Company. Under the terms
of his three-year employment agreement expiring on August 15, 2013, Mr. Friedman has agreed to devote all of his time, attention,
and ability to the business of the Company. The employment agreement provides that Mr. Friedman will receive a base salary for
such services at an annual rate of One Hundred and Fifty Thousand Dollars ($150,000) and he will be eligible for cash bonuses
at the discretion of the board of directors. Mr. Friedman is entitled to participate in our 2009 Long-Term Incentive Plan and
receive other Company-paid employee benefits.



STOCK OPTION PLAN



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, 9,000 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 9,000 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.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------









35









DIRECTOR COMPENSATION TABLE



The following table sets forth information concerning the total
compensation that we have paid or that has accrued on behalf of our directors during the fiscal year ended February 28, 2013.



|Name and principal position |  | Option Award |    
|--------------------------- |  | ------------ | ---
|                            |  |              |    
|Warren Kettlewell (1)       |  | $            | -0-
|Director                    |  |              |    
|                            |  |              |    
|Pat LaVecchia (2)           |  | $            | -0-
|Director                    |  |              |    
|                            |  |              |    
|Donald P. Monaco (3)        |  | $            | -0-
|Director                    |  |              |    
|                            |  |              |    
|Phil Bliss                  |  | $            | -0-
|Director                    |  |              |    
|                            |  |              |    
|Doug Checkeris              |  | $            | -0-
|Director                    |  |              |    



| | (1) | As of February
                                                                                28, 2013, 400 stock options were outstanding and
                                                                                exercisable.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | As of February
                                                                                28, 2013, 400 stock options were outstanding and
                                                                                exercisable.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | As of February
                                                                                28, 2013, 400 stock options were outstanding and
                                                                                exercisable.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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.





36









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.





|Title of Class           |  | Name of Beneficial Owner                          |  | Amount and Nature of Beneficial  Owner |           | Percent of Class (1)
|------------------------ |  | ------------------------------------------------- |  | -------------------------------------- | --------- | --------------------
|                         |  |                                                   |  |                                        |           |                     
|Common Stock             |  | William Kerby                                     |  |                                        | 818,266   | (2)                 
|Series A Preferred Stock |  | CEO & Vice Chairman                               |  |                                        | 809,611   | (3)                 
|Series D Preferred Stock |  |                                                   |  |                                        | 5,000     |                     
|                         |  |                                                   |  |                                        |           |                     
|Common Stock             |  | Warren Kettlewell                                 |  |                                        | 796,578   | (4)                 
|Series A Preferred Stock |  | Director                                          |  |                                        | 331,403   | (3)                 
|                         |  |                                                   |  |                                        |           |                     
|Common Stock             |  | Pat LaVecchia                                     |  |                                        | 27,960    | (5)                 
|Series D Preferred Stock |  | Director                                          |  |                                        | 2,800     |                     
|                         |  |                                                   |  |                                        |           |                     
|Common Stock             |  | Donald P. Monaco                                  |  |                                        | 1,627,400 | (6)                 
|Series A Preferred Stock |  | Director                                          |  |                                        | 1,075,000 | (3)                 
|                         |  |                                                   |  |                                        |           |                     
|Common Stock             |  | Doug Checkeris                                    |  |                                        | 2,400     | (7)                 
|Series C Preferred Stock |  | Director                                          |  |                                        | 12,000    |                     
|                         |  |                                                   |  |                                        |           |                     
|Common Stock             |  | Phillip Bliss                                     |  |                                        | 2,800     | (8)                 
|Series C Preferred Stock |  | Director                                          |  |                                        | 14,000    |                     
|                         |  |                                                   |  |                                        |           |                     
|Common Stock             |  | Adam Friedman                                     |  |                                        | 3,800     | (9)                 
|Series D Preferred Stock |  | CFO                                               |  |                                        | 15,000    |                     
|                         |  |                                                   |  |                                        |           |                     
|Common Stock             |  | All Officers and Directors as a group (7 persons) |  |                                        | 3,279,204 |                     
|Series A Preferred Stock |  |                                                   |  |                                        | 2,216,014 |                     
|Series C Preferred Stock |  |                                                   |  |                                        | 26,000    |                     
|Series D Preferred Stock |  |                                                   |  |                                        | 22,800    |                     







| | (1) | The percentage of common stock held by each listed person is based on 15,583,617 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 2,216,014 shares of Series A Preferred Stock issued and outstanding as of this date of this Annual Report. The percentage
of Series C Preferred Stock held by each person is based on 26,000 shares of Series C Preferred Stock issued and outstanding as
of this date of this Annual Report. The percentage of Series D Preferred Stock held by each person is based on 22,800 shares of
Series D 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.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              







37







| | (2) | William Kerby holds 6,842 shares individually. On October 3, 2011, the Company issued to Mr. Kerby
800 stock options all of which are fully vested and included as beneficial ownership. Mr. Kerby owns 809,611 of Series A Convertible
Preferred shares and as of February 28, 2013 are convertible to 809,610 common shares to be included as beneficial ownership. Mr.
Kerby's family members own 5,000 of Series D Convertible Preferred Shares and as of February 28, 2013 are convertible to 1,000
common shares to be included as beneficial ownership. Mr. Kerby’s family member holds an additional 10 common shares. Mr.
Kerby is also the owner of In-Room Retail Systems, LLC, an inactive company which owns 3 shares. Due to these relationships, Mr.
Kerby beneficially owns 818,266 shares of common stock of the Company.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | (3) | Series A Preferred Stock shareholders have the voting equivalency of 100 votes per shares. Mr. Kerby holds 80,961,100 votes,
Mr. Kettlewell 33,140,300 votes and Mr. Monaco 107,500,000 votes related to Series A Preferred Stock.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | William Kettlewell holds no shares individually. On October 3, 2011, the Company issued to Mr.
Kettlewell 400 stock options of which all are vested and were included as beneficial ownership. Mr. Kettlewell's family members
holds an additional 42,148 shares. Mr. Kettlewell owns 388,661 warrants that can be converted in 388,661 common shares. Mr. Kettlewell
owns 331,403 of Series A Convertible Preferred shares and as of February 28, 2013 are convertible to 331,403 common shares to be
included as beneficial ownership.Due to these relationships, Mr. Kettlewell beneficially owns 796,578 shares of common stock of
the Company.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Pat LaVecchia holds 27,000 shares individually. On October 3, 2011, the Company issued to Mr. LaVecchia
400 stock options of which all are vested and were included as benefical ownership. Mr. LaVecchia own 2,800 of Series D Convertible
Preferred Shares and as of February 28, 2013 are convertible to 560 common shares to be included as beneficial ownership. Mr La
Vecchia beneficially owns 27,960 shares of the Company.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | Donald P. Monaco holds 1,000 shares individually. On October 3, 2011, the Company issued to
                                                            Mr. Monaco 400 stock options of which all are vested and were included as beneficial ownership. Mr. Monaco owns 551,000
                                                            warrants that can be converted in 551,000 common shares. Mr. Monaco owns 1,075,000 of Series A Convertible Preferred shares
                                                            and as of February 28, 2013 are convertible to 1,075,000 common shares to be included as beneficial ownership. Mr. Monaco
                                                            beneficially owns 1,627,400 shares of the Company.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | Mr. Checkeris owns 12,000 of Series D Convertible Preferred Shares and as of February 28, 2013
are convertible to 2,400 common shares to be included as beneficial ownership. Mr. Checkeris beneficially owns 2,400 shares of
the Company.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                           

| | (8) | Mr. Bliss owns 14,000 of Series D Convertible Preferred Shares and as of February 28, 2013 are
convertible to 2,800 common shares to be included as beneficial ownership. Mr. Checkeris beneficially owns 2,800 shares of the
Company.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (9) | On October 3, 2011, the Company issued to Adam Friedman 800 stock options of which all are vested
and were included as beneficial ownership. Mr. Friedman beneficially owns 800 shares of the Company. Mr. Friedman owns 15,000 of
Series D Convertible Preferred Shares and as of February 28, 2013 are convertible to 3,000 common shares to be included as beneficial
ownership. Mr. Friedman beneficially owns 3,800 shares of the Company.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





Changes in Control



We are not aware of any arrangements that
may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.



38









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



A director and officer had advanced funds
to the Company since inception. As of February 28, 2013, the Company does not have any principal balance due to the officer/director,
however there is an unpaid accrued interest balance totaling $1,638. The interest rate is 18% per annum compounded daily, on the
unpaid balance. Interest expense recognized for the years ended February 28, 2013 and February 29, 2012 is $270 and $533, respectively.
See financial statement footnote 9.



An individual that is related to an existing
director/officer has advanced funds to the Company since inception of which the principal amounts have been repaid. As of February
28, 2013, the Company does not have any principal or accrued interest due to this individual. Interest expense recognized for
the years ended February 28, 2013 and February 29, 2012 is $-0- and $2,238, respectively. See financial statement footnote 9.



An unrelated entity where the director/officer
is president has advanced funds to the Company since inception of which the principal amounts have been repaid. As of February
28, 2013, the Company does not have any principal balance due to this entity, however there is an unpaid accrued interest balance
totaling $11,422. Interest expense recognized for the years ended February 28, 2013 and February 29, 2012 is $1,881 and $2,331
respectively. See financial statement footnote 9.



On August 21, 2012, the Company received
$50,000 in proceeds from a board member and issued a bridge loan agreement with no maturity date. In lieu of interest, the Company
issued 100,000 two (2) year warrants with an exercise price of $0.05 per share valued at $1,500 and charged to operations. 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 of 0.29%, dividend yield of -0-%, volatility factor of 384.11% and expected life of 2 years.
Interest expense recognized for the years ended February 28, 2013 and February 29, 2012 is $1,500 and $-0-, respectively. See
financial statement footnote 9.



On January 23, 2013, the Company received
$75,000 in proceeds from a related-party investor and issued a 6 % promissory note maturing on April 30, 2013. The Company issued
375,000 one (1) year warrants with an exercise price of $0.03 per share valued at $5,213 and charged as interest expense to operations.
The Company uses the Black-Scholes option-pricing model to determine the warrant’s fair value using the following assumptions:
risk-free interest rate of 0.15%, dividend yield of -0-%, volatility factor of 354.79% and expected life of 1year. Interest expense
recognized for the years ended February 28, 2013 and February 29, 2012 is $5,213 and $-0-, respectively. See financial statement
footnote 9.



During the year ended February 28, 2013,
the Company issued 85,000 shares of Series A Preferred stock in satisfaction of $85,000 of shareholder advances as part of a $481,403
exchange agreement with a related-party shareholder. See financial statement footnote 10.



During the year ended February 28, 2013,
the Company received a total $400,000 from related party investors. In turn, the Company issued convertible promissory notes with
interest rates ranging from 6% to 12% per annum, maturity dates ranging from September 30, 2012 to October 15, 2014, with various
conversion features and 450,000 one (1) year warrants with an exercise price of $0.05. See financial statement footnote 13.



On June 1, 2006, the Company entered into
a five (5) year equipment lease agreement requiring monthly payments of $5,078 including interest at approximately 18% per year
and expires on June 1, 2011with a related party. On September 3, 2010, the Company amended the original agreement to procure $56,671
of additional equipment. The Company extended the maturity to September 1, 2012 and all other lease terms remained unchanged.
As of February 28, 2013, the Company has satisfied all the terms of the lease agreement. Interest expense on the lease was $1,208
and $9,705 for the years ended February 28, 2013 and February 29, 2012, respectively.



Series A Preferred Stock



On October 14, 2008, the Company 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, par value of $0.00001 per share, a series designated as Series A 10% Cumulative Convertible Preferred
Stock consisting of 3,000,000 shares (the “Series A Preferred Stock”). On October 22, 2009, the Company filed an Amended
and Restated Certificate of Designations of Series A 10% Cumulative Preferred Stock of Next One Interactive, Inc., a Nevada Corporation,
pursuant to NRS 78.1955. The Company has authorized 3,000,000 shares, par value $.01 per share and designated as Series A 10%
Cumulative Convertible Preferred Stock (the “Series A Preferred Stock”).  The Company has 1,809,611and 663,243shares
issued and outstanding as of February 29, 2012 and February 28, 2011, respectively.





39







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. Per the terms of the Amended and
Restated Certificate of Designations, subject to the availability of authorized and unissued shares of Series A Preferred Stock,
the holders of Series A Preferred Stock may, by written notice to the Corporation, 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.  Additionally, the holders of Series A
Preferred Stock, may by written notice to the Corporation, may convert all or part of such holder’s shares (excluding any
shares issued pursuant to conversion of unpaid dividends) into debt obligations of the Corporation, secured by a security interest
in all of the Corporation and its’ subsidiaries, at a rate of $0.50 of debt 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. On August 31, 2009, we issued 75,000 shares of Series A Preferred Stock to Anthony
Byron, the Company’s Chief Operating Officer, in recognition of deferred compensation. On May 10, 2010, an additional 5,000
shares of Series A Preferred Stock was issued to Mr. Byron as settlement for accrued dividends. On March 31, 2011, Mr. Byron converted
80,000 shares of Series A Preferred Stock plus accrued but unpaid dividends on arrears on Series A Preferred stock and the Company
issued 873 shares of common stock valued at $8,120. On September 30, 2011, the Company also issued to Mr. Kerby 226,368 shares
of Preferred Series A stock in lieu of dividend in arrears valued at $113,184. On January 30, 2012, Donald P. Monaco (a board
member) converted $1,000,000 of promissory notes into 1,000,000 shares of Convertible Preferred Series A shares at $1.00 per share.
On July 11, 2012, Donald P. Monaco was issued $75,000 shares of Convertible Preferred Series A shares at a $1.00 per share for
the Company’s receipt of $75,000 in proceeds. On July 10, 2012, Warren Kettlewell was issued 481,403 shares of Convertible
Preferred Series A shares at $1.00 per shared in exchange for debt and accrued interest totaling $197,247 resulting in the Company
recognizing a loss on debt conversion in the amount of $284,156.



William Kerby beneficially owns 818,266
shares of common stock which together with his Series A Preferred shares, gives him the right to vote equivalent to 80,968,955
shares of common stock, representing 34.52% of the total vote. Don Monaco beneficially owns 1,627,400 shares of common stock which
together with his Series A Preferred Shares, gives him the right to vote equivalent to 107,501,000 shares of common stock, representing
45.83% of the total vote. Warren Kettlewell beneficially owns 796,578 shares of common stock which together with his Series
A Preferred Shares, gives him the right to vote equivalent to 33,216,414 shares of common stock, representing 14.16% of the total
vote.



Director Independence



None of our directors are deemed to be
independent with the exception of Pat LaVecchia.



Item 14.  Principal Accountant Fees and Services.



(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 consolidated
financial statements and review of consolidated 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:



|2013 |  | $ | 55,000 | 
|---- |  | - | ------ | 
|2012 |  | $ | 53,000 | 



(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 consolidated financial statements and are not reported in the preceding paragraph:



|2013 |  | $ | 0 | 
|---- |  | - | - | 
|2012 |  | $ | 0 | 



(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:



|2013 |  | $ | 1,200 | 
|---- |  | - | ----- | 
|2012 |  | $ | 1,400 | 



(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:



|2013 |  | $ | 0 | 
|---- |  | - | - | 
|2012 |  | $ | 0 | 





40





PART IV



Item 15.   Exhibits, Financial Statement Schedules.



|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.1         |  | Articles of Incorporation of Maximus (as filed as Exhibit 3.1 to
    the Company’s Registration Statement on Form SB-2 (SEC File No. 333-136630), filed on August 14, 2006)                                                                                                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.2         |  | Amendment to the Articles of Incorporation of Maximus (as filed
    as Exhibit 3.1.2 to the Company’s Registration Statement on Form S-1/A (SEC File No. 333-154177), filed on March
    12, 2009)                                                                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.3         |  | Bylaws of Next 1 Interactive, Inc. (as filed as Exhibit 3.2 to
    the Company’s Registration Statement on Form SB-2 (SEC File No. 333-136630), filed on August 14, 2006)                                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.4         |  | Bylaws of Extraordinary Vacations USA, Inc. (as filed as Exhibit
    3.2.2 to the Company’s Registration Statement on Form S-1/A (SEC File No. 333-154177) filed on March 12, 2009)                                                                                                                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.5         |  | Certificate of Designations of Series A 10% Cumulative Convertible
    Preferred Stock of Next 1 Interactive, Inc. (as filed as Exhibit 4.2 to the Company’s Registration Statement on Form
    S-1/A (SEC File No. 333-154177), filed on March 12, 2009)                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.6         |  | Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock
of Next 1 Interactive, Inc., filed with the Nevada Secretary of State on August 16, 2012*                                                                                                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.7         |  | Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock
of Next 1 Interactive, Inc., filed with the Nevada Secretary of State on August 16, 2012*                                                                                                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.8         |  | Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock
of Next 1 Interactive, Inc., filed with the Nevada Secretary of State on August 16, 2012*                                                                                                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.1         |  | $3,000,000 Zero Coupon Debenture (as filed as Exhibit 4.1 to the
    Company’s Current Report on Form 8-K, filed on August 21, 2009)                                                                                                                                                                                                                                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.2         |  | Common Stock Purchase Warrant, issued October 26, 2010, in favor
    of Lincoln Park Capital Fund, LLC (as filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on September
    2, 2010)                                                                                                                                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.3         |  | $500,000 Promissory Note, dated August 26, 2010, issued in favor
    of The Mark Travel Corporation(as filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on September
    2, 2010)                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.4         |  | $3,500,000 Promissory Note, dated March 5, 2010, issued in favor
    of Mark A. Wilton (as filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on March 10, 2010)                                                                                                                                                                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.1        |  | Share Transaction Purchase Agreement dated September 24, 2008 between
    EXVG, EVUSA and Maximus (as filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (SEC File No. 333-154177)
    on October 10, 2008)                                                                                                                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.2        |  | Form of Subscription and Investment Representation Agreement (as
    filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on August 18, 2010)                                                                                                                                                                                                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.3        |  | Form of Subscription Agreement (as filed as Exhibit 10.1 to the
    Company’s Current Report on Form 8-K, filed on September 2, 2010)                                                                                                                                                                                                                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.4        |  | Purchase Agreement, dated as of October 26, 2010, by and between
    Next 1 Interactive, Inc. and Lincoln Park Capital Fund, LLC (as filed as Exhibit 10.1 to the Company’s Current Report
    on Form 8-K, filed on November 1, 2010)                                                                                                                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.5        |  | Registration Rights Agreement, dated as of October 26, 2010, by
    and between Next 1 Interactive, Inc. and Lincoln Park Capital Fund, LLC (as filed as Exhibit 10.2 to the Company’s Current
    Report on Form 8-K filed on November 1, 2010)                                                                                                                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.6        |  | Strategic Media Agreement, dated August 29, 2010, by and between
    Next 1 Interactive, a Nevada corporation and Market Update Network Corp., dbaMUNCmedia, a Washington corporation (as filed
    as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 22, 2010)                                                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.7        |  | Settlement Agreement, dated May 28, 2010, by and among the Company
    and Televisual Media Works, LLC, a Colorado limited liability company, TV Ad Works, LLC, a Colorado limited liability company,
    TV Net Works, a Colorado limited liability company, TV iWorks, a Colorado limited liability and Mr. Gary Turner and Mrs. Staci
    Turner, individuals residing in the State of Colorado(as filed as Exhibit 10.1 to the Company’s Current Report on Form
    8-K, filed on June 8, 2010)
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.8        |  | Asset Purchase Agreement, dated August 17, 2009, by and among Next
    1 Interactive, Inc. and Televisual Media Works, LLC (as filed as Exhibit 2.1 to the Company’s Current Report on Form
    8-K, filed on August 21, 2009)                                                                                                                                                                                                                                                                     









41







|10.9    |  | Asset Purchase Agreement between Next 1 Interactive, Inc. and Televisual
    Media Works, LLC (as filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on August 21, 2009)                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  |                                                                                                                                                                                                                                                                 
|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)                                                                                                
|        |  |                                                                                                                                                                                                                                                                 
|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 29, 2012*
|        |  |                                                                                                                                                                                                                                                                 
|31.2    |  | 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 29, 2012*
|        |  |                                                                                                                                                                                                                                                                 
|32.1    |  | 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 2002*                                                                                     
|        |  |                                                                                                                                                                                                                                                                 
|32.2    |  | 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*                                                                                     
|        |  |                                                                                                                                                                                                                                                                 
|101.INS |  | XBRL Instance Document**                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                 
|101.SCH |  | XBRL Schema Document**                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                 
|101.CAL |  | XBRL Calculation Linkbase
Document**                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                 
|101.DEF |  | XBRL Definition Linkbase Document**                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                 
|101.LAB |  | XBRL Label Linkbase Document**                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                 
|101.PRE |  | XBRL Presentation Linkbase
Document**                                                                                                                                                                                                                           





* filed herewith



** In accordance with Regulation S-T, the
XBRL-related information on Exhibit No. 101 to this Annual Report on Form 10-K shall be deemed “furnished” herewith
and not “filed.”





42









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 13, 2013 |     | NEXT 1 INTERACTIVE, INC.     
|-------------------- | --- | -----------------------------
|                     |     |                              
|                     | By: | /s/ William Kerby            
|                     |     | William Kerby                
|                     |     | Chief Executive Officer      
|                     |     | and 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 Chairman         |  | June 13, 2013
|William Kerby          |  | (Principal Executive Officer)                |  |              
|                       |  |                                              |  |              
|/s/ Adam Friedman      |  | Chief Financial Officer                      |  | June 13, 2013
|Adam Friedman          |  | (Principal Financial and Accounting Officer) |  |              
|                       |  |                                              |  |              
|/s/ Warren Kettlewell  |  | Director                                     |  | June 13, 2013
|Warren Kettlewell      |  |                                              |  |              
|                       |  |                                              |  |              
|/s/ Pat LaVecchia      |  | Director                                     |  | June 13, 2013
|Pat LaVecchia          |  |                                              |  |              
|                       |  |                                              |  |              
|/s/ Don Monaco         |  | Director                                     |  | June 13, 2013
|Don Monaco             |  |                                              |  |              
|                       |  |                                              |  |              
|/s/ Phil
    Bliss     |  | Director                                     |  | June 13, 2013
|Phil Bliss             |  |                                              |  |              
|                       |  |                                              |  |              
|/s/ Doug
    Checkeris |  | Director                                     |  | June 13, 2013
|Doug Checkeris         |  |                                              |  |              



43













TABLE OF CONTENTS



|                                                             |  | Page No.:
|------------------------------------------------------------ |  | ---------
|                                                             |  |          
|Reports of Independent Registered Public Accounting Firms    |  | F-2      
|                                                             |  |          
|Consolidated Balance Sheets                                  |  | F-4      
|                                                             |  |          
|Consolidated Statements of Operations and Comprehensive Loss |  | F-5      
|                                                             |  |          
|Consolidated Statements of Cash Flows                        |  | F-6      
|                                                             |  |          
|Consolidated Statement of Changes in Stockholders’ Deficit   |  | F-10     
|                                                             |  |          
|Notes to Financial Statements                                |  | F-11     









F-1















REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM





To the Stockholders and Board of Directors

Next 1 Interactive, Inc.





We have audited the accompanying consolidated
balance sheet of Next 1 Interactive, Inc. and Subsidiaries. as of February 28, 2013 and the related consolidated statements of
operations,changes in stockholders’ equity (deficit),and cash flows for the year 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 audit.



We conducted our audit in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated 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 audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose 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 amounts 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 consolidated financial statement
presentation. We believe that our audit provides 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. and Subsidiaries
of February 28, 2013 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 has incurred losses of $4,233,102 for the year ended February 28, 2013 and the
Company had an accumulated deficit of $71,193,862 and a working capital deficit of $13,371,094 at February 28, 2013. These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans
in regards 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/ D’Arelli Pruzansky, P.A.
| | ----------------------------
| | Certified Public Accountants



Boca Raton, Florida

June
12, 2013













F-2









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 29, 2012, and the related consolidated statements of operations,
changes in stockholders’ equity (deficit) and cash flows for the year 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 consolidated 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 audit includes 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 29, 2012, 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 $66,983,176 and a working capital deficit of $14,546,150 at February
29, 2012, net losses for the year ended February 29, 2012 of $13,651,066 and cash used in operations during the year ended February
29, 2012 of $4,822,423. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans in regards 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/ SHERB & CO., LLP        
| | ----------------------------
| | Certified Public Accountants
| | Boca Raton, Florida         
| | June 13, 2012               





F-3







Next 1 Interactive, Inc. and Subsidiaries

Consolidated Balance Sheets



|                                                                                                                                                                                                                         |  | February 28, |             |   | February 29, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | ----------- | - | ------------ | -
|                                                                                                                                                                                                                         |  | 2013         |             |   | 2012         |  
|                                                                                                                                                                                                                         |  |              |             |   |              |  
|Assets                                                                                                                                                                                                                   |  |              |             |   |              |  
|Current Assets                                                                                                                                                                                                           |  |              |             |   |              |  
|Cash                                                                                                                                                                                                                     |  | $            | 36,351      |   |              | $
|Accounts receivable                                                                                                                                                                                                      |  |              | 77,054      |   |              |  
|Stock subscription receivable                                                                                                                                                                                            |  |              | 110,000     |   |              |  
|Prepaid expenses and other current assets                                                                                                                                                                                |  |              | 49,000      |   |              |  
|Security deposits                                                                                                                                                                                                        |  |              | 28,612      |   |              |  
|Total current assets                                                                                                                                                                                                     |  |              | 301,017     |   |              |  
|                                                                                                                                                                                                                         |  |              |             |   |              |  
|Option agreement                                                                                                                                                                                                         |  |              | -           |   |              |  
|Website Development costs and intangible assets, net                                                                                                                                                                     |  |              | 4,288,761   |   |              |  
|Total assets                                                                                                                                                                                                             |  | $            | 4,589,778   |   |              | $
|                                                                                                                                                                                                                         |  |              |             |   |              |  
|Liabilities and Stockholders' Deficit                                                                                                                                                                                    |  |              |             |   |              |  
|Current Liabilities                                                                                                                                                                                                      |  |              |             |   |              |  
|Accounts payable and accrued expenses                                                                                                                                                                                    |  | $            | 3,274,333   |   |              | $
|Other current liabilities                                                                                                                                                                                                |  |              | 159,124     |   |              |  
|Derivative liabilities - convertible promissory notes                                                                                                                                                                    |  |              | 304,987     |   |              |  
|Derivative liabilities - preferred stock                                                                                                                                                                                 |  |              | 98,600      |   |              |  
|Convertible promissory notes, net of discount of $6,777 and $924,446, respectively                                                                                                                                       |  |              | 7,478,828   |   |              |  
|Convertible promissory notes - related party, net of discount of $-0- and $-0-, respectively                                                                                                                             |  |              | 650,000     |   |              |  
|Other advances                                                                                                                                                                                                           |  |              | 68,000      |   |              |  
|Other notes payable                                                                                                                                                                                                      |  |              | 175,000     |   |              |  
|Settlement agreements                                                                                                                                                                                                    |  |              | 64,167      |   |              |  
|Shareholder loans                                                                                                                                                                                                        |  |              | 445,000     |   |              |  
|Capital lease payable                                                                                                                                                                                                    |  |              | -           |   |              |  
|Notes payable - current portion                                                                                                                                                                                          |  |              | 954,072     |   |              |  
|Total current liabilities                                                                                                                                                                                                |  |              | 13,672,111  |   |              |  
|Convertible promissory notes - long term portion, net of discount of $29,444 and $-0-, respectively                                                                                                                      |  |              | 36,941      |   |              |  
|Notes payable - long-term portion                                                                                                                                                                                        |  |              | -           |   |              |  
|                                                                                                                                                                                                                         |  |              |             |   |              |  
|Total liabilities                                                                                                                                                                                                        |  |              | 13,709,052  |   |              |  
|                                                                                                                                                                                                                         |  |              |             |   |              |  
|Stockholders' Deficit                                                                                                                                                                                                    |  |              |             |   |              |  
|Series A Preferred
    stock,  $.01 par value; 3,000,000 authorized; and 2,366,014 shares issued and outstanding at February 28, 2013 and
    1,809,611 shares issued and outstanding at February 29, 2012, respectively |  |              | 23,660      |   |              |  
|Series B Preferred stock, $.00001 par
    value; 3,000,000 authorized; 416,200 shares issued and outstanding at  February 28, 2013 and -0- shares issued and
    outstanding at February 29, 2012, respectively          |  |              | 4           |   |              |  
|Series C Preferred stock, $.00001 par
    value; 3,000,000 authorized; 36,000 shares issued and outstanding at  February 28, 2013 and -0- shares issued and
    outstanding at February 29, 2012, respectively           |  |              | -           |   |              |  
|Series D Preferred stock, $.00001 par
    value; 3,000,000 authorized; 1,132,077 shares issued and outstanding at  February 28, 2013 and -0- shares issued
    and outstanding at February 29, 2012, respectively        |  |              | 11          |   |              |  
|Preferred Stock Subscribed                                                                                                                                                                                               |  |              | 100,000     |   |              |  
|Common stock, $.00001 par value;
    500,000,000 shares authorized; 12,977,942 shares issued and outstanding at  February 28, 2013 and 1,150,003 shares
    issued and outstanding at February 29, 2012, respectively    |  |              | 130         |   |              |  
|Additional paid-in-capital                                                                                                                                                                                               |  |              | 61,958,113  |   |              |  
|                                                                                                                                                                                                                         |  |              | 62,081,918  |   |              |  
|Other comprehensive income                                                                                                                                                                                               |  |              | 33,459      |   |              |  
|Accumulated deficit                                                                                                                                                                                                      |  |              | (71,193,862 | ) |              |  
|Total Next 1 Interactive, Inc. stockholders' deficit                                                                                                                                                                     |  |              | (9,078,485  | ) |              |  
|Noncontrolling interest                                                                                                                                                                                                  |  |              | (40,789     | ) |              |  
|Total stockholders' deficit                                                                                                                                                                                              |  |              | (9,119,274  | ) |              |  
|Total liabilities and stockholders' deficit                                                                                                                                                                              |  | $            | 4,589,778   |   |              | $



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

F-4







Next 1 Interactive, Inc. and Subsidiaries

Consolidated Statements of Operations and
Comprehensive Loss

For the years ended



|                                                     |  | February 28, |            |   | February 29, |  
|---------------------------------------------------- |  | ------------ | ---------- | - | ------------ | -
|                                                     |  | 2013         |            |   | 2012         |  
|                                                     |  |              |            |   |              |  
|Revenues                                             |  |              |            |   |              |  
|Travel and commission revenues                       |  | $            | 550,367    |   |              | $
|Advertising revenues                                 |  |              | 436,748    |   |              |  
|Total revenues                                       |  |              | 987,115    |   |              |  
|                                                     |  |              |            |   |              |  
|Cost of revenues                                     |  |              | 501,460    |   |              |  
|                                                     |  |              |            |   |              |  
|Gross profit (loss)                                  |  |              | 485,655    |   |              |  
|                                                     |  |              |            |   |              |  
|Operating expenses                                   |  |              |            |   |              |  
|Salaries and benefits                                |  |              | 1,566,043  |   |              |  
|Selling and promotions expense                       |  |              | 131,504    |   |              |  
|General and administrative                           |  |              | 3,618,261  |   |              |  
|Total operating expenses                             |  |              | 5,315,808  |   |              |  
|                                                     |  |              |            |   |              |  
|Operating loss                                       |  |              | (4,830,153 | ) |              |  
|                                                     |  |              |            |   |              |  
|Other income (expense)                               |  |              |            |   |              |  
|Interest expense                                     |  |              | (1,774,792 | ) |              |  
|Loss on settlement of debt                           |  |              | (309,201   | ) |              |  
|Gain on legal settlement                             |  |              | 701,026    |   |              |  
|Gain on change in fair value of derivatives          |  |              | 2,081,029  |   |              |  
|Loss on impairment of intangible assets              |  |              | -          |   |              |  
|Other expense                                        |  |              | (101,011   | ) |              |  
|Total other income (expense)                         |  |              | 597,051    |   |              |  
|                                                     |  |              |            |   |              |  
|Net loss                                             |  |              | (4,233,102 | ) |              |  
|                                                     |  |              |            |   |              |  
|Net loss attributable to the noncontrolling interest |  |              | 40,789     |   |              |  
|                                                     |  |              |            |   |              |  
|Net loss attributable to Next 1 Interactive, Inc.    |  | $            | (4,192,313 | ) |              | $
|                                                     |  |              |            |   |              |  
|Preferred Stock Dividend                             |  |              | (18,373    | ) |              |  
|                                                     |  |              |            |   |              |  
|Net Loss Applicable to Common Shareholders           |  | $            | (4,210,686 | ) |              | $
|                                                     |  |              |            |   |              |  
|Comprehensive loss:                                  |  |              |            |   |              |  
|Unrealized gains on currency translation adjustment  |  |              | 33,459     |   |              |  
|Comprehensive loss                                   |  | $            | (4,177,227 | ) |              | $
|                                                     |  |              |            |   |              |  
|Weighted average number of shares outstanding        |  |              | 7,407,990  |   |              |  
|                                                     |  |              |            |   |              |  
|Basic and diluted net loss per share                 |  | $            | (0.57      | ) |              | $



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



F-5







Next 1 Interactive, Inc. and Subsidiaries

Consolidated Statements of Cash Flows



|                                                                         |  | February 28, |            |   | February 29, |  
|------------------------------------------------------------------------ |  | ------------ | ---------- | - | ------------ | -
|                                                                         |  | 2013         |            |   | 2012         |  
|Cash flows from operating activities:                                    |  |              |            |   |              |  
|Net loss applicable to Next 1 Interactive, Inc. common stock             |  | $            | 4,192,313  |   |              | $
|Adjustments to reconcile net loss to net cash from operating activities: |  |              |            |   |              |  
|Interest on bridge loan conversions                                      |  |              | -          |   |              |  
|Noncontrolling interest in loss of consolidated subsidiaries             |  |              | (40,789    | ) |              |  
|Warrants issued in lieu of interest                                      |  |              | 38,774     |   |              |  
|Loss on conversion of debt                                               |  |              | 309,201    |   |              |  
|Gain on legal settlement of debt                                         |  |              | (701,026   | ) |              |  
|Other comprehensive loss                                                 |  |              | 33,459     |   |              |  
|Loss on impairment of intangible assets                                  |  |              | -          |   |              |  
|Amortization of intangible assets                                        |  |              | 604,008    |   |              |  
|Amortization of discount on notes payable                                |  |              | 1,089,639  |   |              |  
|Amortization of finance fees                                             |  |              | -          |   |              |  
|Stock based compensation and consulting fees                             |  |              | 1,247,021  |   |              |  
|Modification of warrants                                                 |  |              | -          |   |              |  
|Conversion penalties                                                     |  |              | 99,100     |   |              |  
|Fees assessed for debt assignment                                        |  |              | 31,000     |   |              |  
|Gain on change in fair value of derivatives                              |  |              | (2,081,029 | ) |              |  
|Changes in operating assets and liabilities:                             |  |              |            |   |              |  
|(Increase) Decrease in accounts receivable                               |  |              | (35,459    | ) |              |  
|(Increase) decrease in prepaid expenses and other current assets         |  |              | (49,000    | ) |              |  
|Decrease in security deposits                                            |  |              | 17,999     |   |              |  
|(Decrease) increase in accounts payable and accrued expenses             |  |              | (1,102,347 | ) |              |  
|Decrease in other current liabilities                                    |  |              | (512,554   | ) |              |  
|Net cash used in operating activities                                    |  |              | (5,244,316 | ) |              |  
|                                                                         |  |              |            |   |              |  
|Cash flows from investing activities:                                    |  |              |            |   |              |  
|Purchase of option agreement                                             |  |              | -          |   |              |  
|Net cash used in investing activities                                    |  |              | -          |   |              |  
|                                                                         |  |              |            |   |              |  
|Cash flows from financing activities:                                    |  |              |            |   |              |  
|Proceeds from convertible promissory notes                               |  |              | 744,500    |   |              |  
|Payments on convertible promissory notes                                 |  |              | (77,667    | ) |              |  
|Proceeds from other advances                                             |  |              | -          |   |              |  
|Proceeds from other notes payable                                        |  |              | 125,000    |   |              |  
|Principal payments of other notes payable                                |  |              | (20,000    | ) |              |  
|Principal payments of settlement agreements                              |  |              | (85,750    | ) |              |  
|Proceeds from shareholder loans                                          |  |              | 843,000    |   |              |  
|Payment on shareholder loans                                             |  |              | (20,000    | ) |              |  
|Proceeds from sundry notes payable                                       |  |              | -          |   |              |  
|Principal payments on sundry notes payable                               |  |              | (42,500    | ) |              |  
|Principal payments on capital lease                                      |  |              | (25,405    | ) |              |  
|Proceeds from issuance of series A preferred shares                      |  |              | 75,000     |   |              |  
|Proceeds from issuance of series B preferred shares                      |  |              | 1,823,000  |   |              |  
|Proceeds from issuance of series C preferred shares                      |  |              | 50,000     |   |              |  
|Proceeds from issuance of series D preferred shares                      |  |              | 1,863,500  |   |              |  
|Proceeds from preferred series D subscriptions agreements                |  |              | 15,000     |   |              |  
|Proceeds from the collection of stock subscription receivable            |  |              | -          |   |              |  
|Proceeds from the sale of common stock and warrants                      |  |              | -          |   |              |  
|Net cash provided by financing activities                                |  |              | 5,267,678  |   |              |  



F-6











|                                                                      |  | February 28, |            |  | February 29, |  
|--------------------------------------------------------------------- |  | ------------ | ---------- |  | ------------ | -
|                                                                      |  | 2013         |            |  | 2012         |  
|                                                                      |  |              |            |  |              |  
|Net (decrease) increase in cash                                       |  |              | 23,362     |  |              |  
|                                                                      |  |              |            |  |              |  
|Cash at beginning of period                                           |  |              | 12,989     |  |              |  
|                                                                      |  |              |            |  |              |  
|Cash at end of period                                                 |  | $            | 36,351     |  |              | $
|                                                                      |  |              |            |  |              |  
|Supplemental disclosure:                                              |  |              |            |  |              |  
|Cash paid for interest                                                |  | $            | 350,408    |  |              | $
|                                                                      |  |              |            |  |              |  
|Supplemental disclosure of non-cash investing and financing activity: |  |              |            |  |              |  
|Shares/Warrants issued for consulting:                                |  |              |            |  |              |  
|Common stock:                                                         |  |              |            |  |              |  
|Value                                                                 |  | $            | 54,763     |  |              | $
|Shares                                                                |  |              | 385,734    |  |              |  
|Warrants                                                              |  |              | 733,400    |  |              |  
|                                                                      |  |              |            |  |              |  
|Series B Preferred:                                                   |  |              |            |  |              |  
|Value                                                                 |  | $            | 258,000    |  |              | $
|Shares                                                                |  |              | 51,600     |  |              |  
|                                                                      |  |              |            |  |              |  
|Series C Preferred:                                                   |  |              |            |  |              |  
|Value                                                                 |  | $            | 130,000    |  |              | $
|Shares                                                                |  |              | 26,000     |  |              |  
|                                                                      |  |              |            |  |              |  
|Series D Preferred:                                                   |  |              |            |  |              |  
|Value                                                                 |  | $            | 794,134    |  |              | $
|Shares                                                                |  |              | 158,648    |  |              |  
|Warrants                                                              |  |              | 103,200    |  |              |  
|                                                                      |  |              |            |  |              |  
|Warrant exchange agreement:                                           |  |              |            |  |              |  
|Value                                                                 |  | $            | -          |  |              | $
|Warrants cancelled                                                    |  |              | 1,600      |  |              |  
|Common shares issued                                                  |  |              | -          |  |              |  
|                                                                      |  |              |            |  |              |  
|Warrant modification agreements:                                      |  |              |            |  |              |  
|Value                                                                 |  | $            | -          |  |              | $
|                                                                      |  |              |            |  |              |  
|Warrants expired                                                      |  |              | 56,812     |  |              |  
|                                                                      |  |              |            |  |              |  
|Shares/Warrants issued for conversion of debt to equity:              |  |              |            |  |              |  
|Common stock:                                                         |  |              |            |  |              |  
|Value                                                                 |  | $            | 681,792    |  |              | $
|Shares                                                                |  |              | 11,442,205 |  |              |  





F-7







|Supplemental disclosure of non-cash investing and financing activity (continued): |  | February 28, |           |  | February 29, |  
|--------------------------------------------------------------------------------- |  | ------------ | --------- |  | ------------ | -
|                                                                                  |  | 2013         |           |  | 2012         |  
|                                                                                  |  |              |           |  |              |  
|Series A Preferred:                                                               |  |              |           |  |              |  
|Value                                                                             |  | $273,951     |           |  | $1,000,000   |  
|Shares                                                                            |  |              | 273,951   |  |              |  
|                                                                                  |  |              |           |  |              |  
|Series D Preferred:                                                               |  |              |           |  |              |  
|Value                                                                             |  | $            | 925,646   |  |              | $
|Shares                                                                            |  |              | 185,129   |  |              |  
|                                                                                  |  |              |           |  |              |  
|Shares/Warrants issued for conversion of shareholder advances:                    |  |              |           |  |              |  
|Common Stock:                                                                     |  |              |           |  |              |  
|Value                                                                             |  | $            | -         |  |              | $
|Shares                                                                            |  |              | -         |  |              |  
|Warrants                                                                          |  |              | -         |  |              |  
|                                                                                  |  |              |           |  |              |  
|Series A Preferred:                                                               |  |              |           |  |              |  
|Value                                                                             |  | $            | 207,452   |  |              | $
|Shares                                                                            |  |              | 207,452   |  |              |  
|                                                                                  |  |              |           |  |              |  
|Series D Preferred:                                                               |  |              |           |  |              |  
|Value                                                                             |  | $            | 170,000   |  |              | $
|Shares                                                                            |  |              | 32,000    |  |              |  
|                                                                                  |  |              |           |  |              |  
|Conversion of shareholder advances to convertible promissory notes                |  | $            | 225,000   |  |              | $
|                                                                                  |  |              |           |  |              |  
|Shares/Warrants issued for conversion of accounts payable:                        |  |              |           |  |              |  
|Common Stock:                                                                     |  |              |           |  |              |  
|Value                                                                             |  | $            | -         |  |              | $
|Shares                                                                            |  |              | -         |  |              |  
|                                                                                  |  |              |           |  |              |  
|Series D Preferred:                                                               |  |              |           |  |              |  
|Value                                                                             |  | $            | 18,000    |  |              | $
|Shares                                                                            |  |              | 3,600     |  |              |  
|                                                                                  |  |              |           |  |              |  
|Shares/Warrants issued for investment in subsidiary:                              |  |              |           |  |              |  
|Series D Preferred:                                                               |  |              |           |  |              |  
|Value                                                                             |  | $            | 1,900,000 |  |              | $
|Shares                                                                            |  |              | 380,000   |  |              |  
|                                                                                  |  |              |           |  |              |  
|Warrants issued in lieu of interest                                               |  |              |           |  |              |  
|Value                                                                             |  | $            | 38,774    |  |              | $
|Warrants                                                                          |  |              | 1,475,000 |  |              |  







F-8









|Supplemental disclosure of non-cash investing and financing activity (continued): |  | February 28, |         |  | February 29, |  
|--------------------------------------------------------------------------------- |  | ------------ | ------- |  | ------------ | -
|                                                                                  |  | 2013         |         |  | 2012         |  
|                                                                                  |  |              |         |  |              |  
|Shares issued to employees:                                                       |  |              |         |  |              |  
|Common stock:                                                                     |  |              |         |  |              |  
|Value                                                                             |  | $            | -       |  |              | $
|Shares                                                                            |  |              | -       |  |              |  
|                                                                                  |  |              |         |  |              |  
|Re-issuance of treasury stock:                                                    |  |              |         |  |              |  
|Value                                                                             |  | $            | -       |  |              | $
|Shares                                                                            |  |              | -       |  |              |  
|                                                                                  |  |              |         |  |              |  
|Stock options vested:                                                             |  |              |         |  |              |  
|Value                                                                             |  | $            | 10,125  |  |              | $
|Number of options                                                                 |  |              | 2,025   |  |              |  
|                                                                                  |  |              |         |  |              |  
|Preferred stock dividend:                                                         |  |              |         |  |              |  
|Series A Preferred                                                                |  |              | 3,790   |  |              |  
|                                                                                  |  |              |         |  |              |  
|Convertible promissory note assignments to new third party investors              |  | $            | 486,600 |  |              | $
|                                                                                  |  |              |         |  |              |  
|Convertible promissory notes converted to new convertible promissory notes        |  | $            | -       |  |              | $
|                                                                                  |  |              |         |  |              |  
|Conversion of Series A Preferred shares to Common Stock:                          |  |              |         |  |              |  
|Value                                                                             |  | $            | -       |  |              | $
|Shares                                                                            |  |              | -       |  |              |  





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





F-9





Next 1 Interactive, Inc. and Subsidiaries

Consolidated Statement of Changes in
Stockholders’ Deficit



|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  | Additional    |  |  |       |            |  | Other  |   |     |         |  |   |            |   |  |         |         
|--------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ----------------- | - | ------ | ----------------- |  |  | ----------------- |  |  | ------ | - |  | ------------ |  | ------ | ------- |  |  | -------- |  |  | ------------- | --------- |  | ----------- |  | -- | --------------- |  |  | ------------- |  |  | ----- | ---------- |  | ------ | - | --- | ------- |  | - | ---------- | - |  | ------- | --------
|                                                                                        |  | Preferred Stock A |           |   | Preferred Stock B |   |        | Preferred Stock C |  |  | Preferred Stock D |  |  | Stock  |   |  | Common Stock |  |        | Paid-in |  |  | Treasury |  |  | Comprehensive |           |  | Accumulated |  |    | Non-Controlling |  |  | Stockholders’ | 
|                                                                                        |  | Shares            |           |   | Amount            |   |        | Shares            |  |  | Amount            |  |  | Shares |   |  | Amount       |  |        | Shares  |  |  | Amount   |  |  | Subscribed    |           |  | Shares      |  |    | Amount          |  |  | Capital       |  |  | Stock |            |  | Income |   |     | Deficit |  |   | Interest   |   |  | Deficit |         
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Balances, February 28, 2011                                                             |  |                   | 663,243   |   |                   | $ | 6,632  |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 109,715    |  |        | $ | 1   |         |  | $ | 43,068,408 |   |  | $       | (125,786
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Common stock issued for cash                                                            |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 6,032      |  |        |   | -   |         |  |   | 6,004      |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Sale of private placement units consisting of one share of common stock and one warrant |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 4,700      |  |        |   | -   |         |  |   | 348,746    |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Shares/warrants issued for consulting                                                   |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 79,712     |  |        |   | 1   |         |  |   | 1,249,771  |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Stock Compensation                                                                      |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 120        |  |        |   | -   |         |  |   | 25,125     |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Warrants cancelled and replaced by shares issued of common stock                        |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 3,500      |  |        |   | -   |         |  |   | 220,816    |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Shares/warrants issued for loan conversion                                              |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 936,666    |  |        |   | 10  |         |  |   | 3,582,686  |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Preferred Series A shares/warrants issued for loan conversion                           |  |                   | 1,000,000 |   |                   |   | 10,000 |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 990,000    |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Shares/warrants issued in connection with notes payable                                 |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 900        |  |        |   | -   |         |  |   | 2,697,250  |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Debt settlement and exercise of warrants                                                |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 6,600      |  |        |   | -   |         |  |   | 400,000    |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Shares/warrants issued in connection with conversion of accounts payable                |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 870        |  |        |   | -   |         |  |   | 42,791     |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Modification of warrants terms                                                          |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 85,133     |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Dividends declared and converted to preferred series A                                  |  |                   | 226,368   |   |                   |   | 2,264  |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 110,920    |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Preferred series A shares converted to common shares                                    |  |                   | (80,000   | ) |                   |   | (800   | )                 |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 873        |  |        |   | -   |         |  |   | 8,120      |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Dividends                                                                               |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | -          |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Net Loss                                                                                |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | -          |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Conversion of treasury stock into common shares                                         |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 315        |  |        |   | -   |         |  |   | (100,363   | ) |  |         | 125,786 
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Balances, February 29, 2012                                                             |  |                   | 1,809,611 |   |                   | $ | 18,096 |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 1,150,003  |  |        | $ | 12  |         |  | $ | 52,735,407 |   |  | $       | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Preferred stock/warrants issued for cash:                                               |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Series A                                                                                |  |                   | 75,000    |   |                   |   | 750    |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 74,250     |   |  |         | -       
|Series B                                                                                |  |                   | -         |   |                   |   | -      |                   |  |  | 364,600           |  |  |        | 4 |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 1,822,996  |   |  |         | -       
|Series C                                                                                |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | 10,000 |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 50,000     |   |  |         | -       
|Series D                                                                                |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | 372,700   |  |             |  | 4  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 1,863,496  |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Shares issued for consulting:                                                           |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Common stock                                                                            |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 385,734    |  |        |   | 4   |         |  |   | 54,759     |   |  |         | -       
|Series B                                                                                |  |                   | -         |   |                   |   | -      |                   |  |  | 51,600            |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 258,000    |   |  |         | -       
|Series C                                                                                |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | 26,000 |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 130,000    |   |  |         | -       
|Series D                                                                                |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | 158,648   |  |             |  | 2  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 794,132    |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Shares issued for conversion of debt to equity:                                         |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Common stock                                                                            |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | 11,442,205 |  |        |   | 114 |         |  |   | 681,678    |   |  |         | -       
|Series A preferred stock                                                                |  |                   | 481,403   |   |                   |   | 4,814  |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 476,589    |   |  |         | -       
|Series D preferred shares                                                               |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | 185,129   |  |             |  | 2  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 925,644    |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Series D preferred shares issued for conversion of shareholder advances                 |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | 32,000    |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 160,000    |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Series D preferred shares issued for accounts payable                                   |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | 3,600     |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 18,000     |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Series D preferred shares issued for investment in subsidiary                           |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | 380,000   |  |             |  | 3  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 1,899,996  |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Series D preferred shares subscriptions                                                 |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | 100,000       |  |  |       | -          |  |        |   | -   |         |  |   | -          |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Warrants Issued in lieu of interest                                                     |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 38,774     |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Stock compensation - options vested                                                     |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | 10,125     |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Preferred stock dividend(s)                                                             |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | -          |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Net loss applicable to Next 1 Interactive, Inc.                                         |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | -          |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Net loss attributable to the noncontrolling interest                                    |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | -          |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Other comprehensive income                                                              |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | -          |   |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Derivative liability on Series D preferred shares issued for investment in subsidiary   |  |                   | -         |   |                   |   | -      |                   |  |  | -                 |  |  |        | - |  |              |  | -      |         |  |  | -        |  |  |               | -         |  |             |  | -  |                 |  |  | -             |  |  |       | -          |  |        |   | -   |         |  |   | (35,733    | ) |  |         | -       
|                                                                                        |  |                   |           |   |                   |   |        |                   |  |  |                   |  |  |        |   |  |              |  |        |         |  |  |          |  |  |               |           |  |             |  |    |                 |  |  |               |  |  |       |            |  |        |   |     |         |  |   |            |   |  |         |         
|Balances, February 28, 2013                                                             |  |                   | 2,366,014 |   |                   | $ | 23,660 |                   |  |  | 416,200           |  |  |        | 4 |  |              |  | 36,000 |         |  |  | -        |  |  |               | 1,132,077 |  |             |  | 11 |                 |  |  | 100,000       |  |  |       | 12,977,942 |  |        | $ | 130 |         |  | $ | 61,958,113 |   |  | $       | -       



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



F-10









Note 1 - Summary of Business Operations and Significant
Accounting Policies



Nature of Operations and Business Organization



Next 1 Interactive (“Next 1”
or the “Company”) is the parent company of Next 1 Network (formerly RRTV Network and Resort & Residence TV), Next
Trip – its travel division, and Next One Realty – its real estate division. The Company is positioning itself to emerge
as a multi revenue stream “Next Generation” media-company, representing the convergence of TV, Mobile devices and
the Internet by providing multiple platform dynamics for interactivity on TV, Video On Demand (VOD) and web solutions. The Company
has worked with multiple distributors beta testing its platforms as part of its roll out of TV programming and VOD Networks. The
list of distributors the Company has worked with includes Comcast, Cox, Time Warner and Direct TV. At present the company operates
the Home Tour Network through its majority owned subsidiary real estate partner – RealBiz Media. The Home Tour Network features
over 5,000 home listings in five cities on the Cox Communications network.



Next 1 Interactive is comprised of
three distinct categories: The Company recognized the convergence taking place in interactive television/the web and began
the process of recreating several of its key relationships in real estate, travel and media over the last three years in efforts
to position itself for the interactive revolution with “TV everywhere”. Currently Next 1 has operating agreements
and /or active discussions are underway with broadband, cable and Over the Top TV solutions for the Next 1 Networks during the
next 12 months.



Linear TV Network with supporting Web
sites – The potential revenue streams from Next 1 Networks - Traditional Advertising, Interactive Ads, Sponsorships,
Paid Programming, travel commissions and Referral fees.



TV Video On Demand channels for Travel
with supporting Web sites – The potential revenue streams from Travel Video on Demand - Monthly sponsorship packages,
pre-roll advertising, travel commissions and referral fees, acceleration of company owned travel entities (Maupintours, Next Trip,
Extraordinary Vacations and Trip Professionals).



TV Video on Demand channels for Real
Estate with supporting Web sites – The potential revenue streams from Real Estate Video on Demand Channel - Commissions
and referral fees on home sales, pre-roll/post-roll advertising, lead generation fees, banner ads and cross market advertising
promotions ($89 listing and marketing fee, web and mobile advertising).



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 provided for the exchange rate of 1 share of Maximus common stock for 60 shares Extraordinary Vacations USA
common stock. The consolidated financial statements of Next 1, Interactive, Inc. reflects the retroactive effect of the Share
Exchange as if it had occurred at March 1, 2008. All loss per share amounts are reflected based on Next 1 shares outstanding,
basic and dilutive.



Effective May 22, 2012, the Company affected
a 1-for-500 reverse stock split, which reduced the number of issued and outstanding shares from 1,848,014,287 to 3,696,029 shares.
The Company has retroactively adjusted the consolidated financial statements to reflect this reverse stock split.



Material Definitive Agreement







On October 9, 2012, our Company, Next 1 Interactive, Inc., a
Nevada corporation (“Next 1”) and RealBiz Media Group, Inc., formerly known as Webdigs, Inc. (“Webdigs”),
completed the transactions contemplated by that certain Share Exchange Agreement entered into on April 4, 2012 (the “Exchange
Agreement”). Under the Exchange Agreement, our Company exchanged with Webdigs all of the outstanding equity in Attaché
Travel International, Inc., a Florida corporation and wholly owned subsidiary of Next 1 (“Attaché”). Attaché
owns approximately 85% of a corporation named RealBiz Holdings Inc. which is the parent corporation of RealBiz360, Inc. (“RealBiz”).
RealBiz is a real estate media services company whose proprietary video processing technology has made it one of the leaders in
providing home virtual tours to the real estate industry. In exchange for our Attaché shares, our Company received a total
of 93 million shares of newly designated Series A Convertible Preferred Stock (“Webdigs Series A Stock”). The exchange
of Attaché shares in exchange for Webdigs Series A Stock is referred to as the “Exchange Transaction.”



F-11







Note 1 - Summary of Business Operations
and Significant Accounting Policies (continued)



Principles of Consolidation



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



The Company owns 84.5% interest in Real Biz Holdings, Inc.
and 92.66% interest in Real Biz Media Group, Inc. and these entities’ accounts are consolidated in the accompanying
financial statements because we have control over operating and financial policies. We have eliminated all inter-company
balances and transactions. The 7.34% non-controlling interest in RealBiz Media Group, Inc. is represented by 7,000,000 shares
of Series A Preferred Stock. The Series A Preferred Stock bear dividends at an annual rate of 10%.



Noncontrolling Interests



The Company accounts for its less than
100% interest in consolidated subsidiaries in accordance with ASC Topic 810, Consolidation, and accordingly the Company
presents noncontrolling interests as a component of equity on its consolidated balance sheets and reports noncontrolling
interest net loss under the heading “Net loss applicable to noncontrolling interest in consolidated subsidiary” in
the consolidated statements of operations.



Use of Estimates



The Company’s significant estimates
include allowance for doubtful accounts, valuation of intangible assets, accrued expenses, stock based compensation and derivative liabilities. These estimates
and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated 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 consolidated 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.



Cash and Cash Equivalents



Cash and cash equivalents consist of cash
and short-term investments with insignificant interest rate risk and original maturities of 90 days or less.



Accounts Receivable



The Company extends credit to its customers
in the normal course of business. Further, the Company regularly reviews outstanding receivables, and provides 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.



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. As of February 28, 2013, the Company had no 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 Other Intangible Assets



In accordance with ASC 350-30-65 “Goodwill
and Other Intangible Assets, the Company assesses the impairment of identifiable intangible assets whenever events or changes
in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers to be important which
could trigger an impairment review include the following:

F-12







Note 1 - Summary of Business Operations
and Significant Accounting Policies (continued)



Goodwill and Other Intangible Assets (continued)



| | 1. | Significant underperformance to expect historical or project future
                                                           operating results;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Significant changes in the manner or use of the acquired assets
                                                           or the strategy for the overall business; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Significant negative industry or economic trends.
| | -- | -------------------------------------------------



When the Company determines that the carrying
value of an intangible many not be recoverable based upon the existence of one or more of the above indicator of impairment and
the carrying value of the asset cannot be recovered from projected undiscounted cash flow, the Company records and impairment
charge. The Company measures any impairment based on a project discounted cash flow method using a discount rate determined by
management to be commensurate with the risk inherent to the current business model. Significant management judgment is required
in determining whether an indicator of impairment exist and in projecting cash flows. The Company evaluated the remaining useful
life of the intangibles and recorded a loss on impairment of intangible assets during the years ended February 28, 2013 and February
29, 2012 of $-0- and $1,856,054, respectively.



Intellectual properties that have finite
useful lives are amortized over their useful lives. The amortization expense for the years ended February 28, 2013 and February
29, 2012 was $604,008 and $1,222,861, respectively.



Other Comprehensive Income (Loss)



Comprehensive income (loss) includes net income (loss) and items defined as other comprehensive income
(loss). Items defined as other comprehensive income (loss) include items such as foreign currency translation adjustments. For
the years ended February 28, 2013 and February 29, 2012, the accumulated comprehensive loss was $33,459 and $-0-, respectively.



Convertible Debt Instruments



The Company records debt net of debt discount
for beneficial conversion features and warrants, on a relative fair value basis. Beneficial conversion features are recorded pursuant
to the Beneficial Conversion and Debt Topics of the FASB Accounting Standards Codification. The amounts allocated to warrants
and beneficial conversion rights are recorded as debt discount and as additional paid-in-capital. Debt discount is amortized to
interest expense over the life of the debt.



Derivative Instruments



The Company enters into financing arrangements
that consist of freestanding derivative instruments or are hybrid instruments that contain embedded derivative features. The Company
accounts for these arrangements in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments
and Hedging Activities (“ASC 815”) as well as related interpretation of this standard. In accordance with this standard,
derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with
gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are
bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company
determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation
models, giving consideration to all of the rights and obligations of each instrument.



We estimate fair values of derivative
financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective
measuring fair values. In selecting the appropriate technique, we consider, among other factors, the nature of the instrument,
the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing
warrants, we generally use the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite
assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments.
Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that
may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors.
In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading
market price of our common stock. Since derivative financial instruments are initially and subsequently carried at fair values,
our income (expense) going forward will reflect the volatility in these estimates and assumption changes. Under the terms of the
new accounting standard, increases in the trading price of the company’s common stock and increases in fair value during
a given financial quarter result in the application of non-cash derivative expense. Conversely, decreases in the trading price
of the Company’s common stock and decreases in trading fair value during a given financial quarter result in the application
of non-cash derivative income.





F-13







Earnings per Share



Basic earnings per share is computed by
dividing net income by the weighted average number of shares of common stock outstanding during the period.



Diluted earnings per share is computed
by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during each period. Diluted loss per common share is not presented because it is anti-dilutive. The Company’s
common stock equivalents include the following:



|                                                                      |  | February 28, 2013 |            |  | February 29, 2012 | 
|--------------------------------------------------------------------- |  | ----------------- | ---------- |  | ----------------- | 
|Series A convertible preferred stock issued and outstanding           |  |                   | 2,366,014  |  |                   | 
|Series B convertible preferred stock issued and outstanding           |  |                   | 2,138,000  |  |                   | 
|Series C convertible preferred stock issued and outstanding           |  |                   | 180,000    |  |                   | 
|Series D convertible preferred stock issued and outstanding           |  |                   | 5,660,385  |  |                   | 
|Warrants to purchase common stock issued, outstanding and exercisable |  |                   | 6,495,778  |  |                   | 
|Stock options issued, outstanding and exercisable                     |  |                   | 4,050      |  |                   | 
|Series D convertible preferred subscribed                             |  |                   | 100,000    |  |                   | 
|Shares on convertible promissory notes                                |  |                   | 32,133,155 |  |                   | 
|                                                                      |  |                   | 49,077,382 |  |                   | 



Revenue Recognition



Barter



Barter transactions represent the exchange
of advertising or programming for advertising, merchandise or services. Barter transactions which exchange advertising for advertising
are accounted for in accordance with  “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.



Barter transactions which exchange advertising
or programming for merchandise or services are recorded at the monetary value of the revenue expected to be realized from the
ultimate disposition of merchandise or services. Expenses incurred in broadcasting barter provided are recorded when the program,
merchandise or service is utilized.



Barter revenue of  $-0- has been recognized for the years ended February 28, 2013 and February 29, 2012, respectively. Barter expense of
$-0-  has been recognized for the years ended February 28, 2013 and February 29, 2012.



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.



F-14







Note 1 - Summary of Business Operations and Significant
Accounting Policies (continued)



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 Promotion



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.



Advertising Expense



Advertising costs are charged to expense
as incurred and are included in selling and promotions expense in the accompanying consolidated financial statements. Advertising
expense for the years ended February 28, 2013 and February 29, 2012 was $131,504 and $55,551.



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 consolidated 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
consolidated 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.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-15







Note 1 - Summary of Business Operations and Significant
Accounting Policies (continued)



Fair Value of Financial Instruments
(continued)



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. See footnote 16 for fair value measurements.



Reclassifications



We have reclassified certain amounts previously
reported in the fiscal year ended February 29, 2012 to conform to the classifications used in the year ended February 28, 2013.
Such reclassifications have no effect on the reported net loss.



Recent Accounting Pronouncements



In July 2012,
the Financial Accounting Standards Board (FASB) amended ASC 350,“ Intangibles — Goodwill and Other”.
This amendment is intended to simplify how an entity tests indefinite-lived assets other than goodwill for impairment by providing
entities with an option to perform a qualitative assessment to determine whether further impairment testing is necessary. The
amended provisions will be effective for the Company beginning in the first quarter of 2014, and early adoption is permitted.
This amendment impacts impairment testing steps only, and therefore adoption will not have an impact on the Company’s consolidated
financial position, results of operations or cash flows.



In August 2012,
the FASB issued Accounting Standards Update (“ASU”) 2012-03, “Technical Amendments and Corrections to SEC Sections:
Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release
No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update
No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is
not expected to have a material impact on financial position or results of operations of the Company.



In October 2012,
the FASB issued ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04 ("ASU
2012-04"). The amendments in this update cover a wide range of topics in the Accounting Standards Codification. These amendments
include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair
value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The
adoption of ASU 2012-04 is not expected to have a material impact on financial position or results of operations of the Company.



In February 2013,
the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive (ASU 2013-02). This
guidance is the culmination of the FASB’s deliberation on reporting reclassification adjustments from accumulated other
comprehensive income (AOCT). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or
other comprehensive income. However, the amendments required disclosure of amounts reclassified out of AOCI in its entirety, by
component, on the face of the statement of operations or in the notes thereto. Amounts that are not required to be reclassified
in their entirety to net income must be cross referenced to other disclosure that provide additional detail. This standard is
effective prospectively for annual and interim reporting periods beginning after December 15, 2012. The adoption of ASU 201-02
is not expected to have a material impact on financial position or results of operations of the Company.



Management does not believe that any other
recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying
consolidated financial statements.



Note 2 - Going Concern



As reflected in the accompanying consolidated
financial statements, the Company had an accumulated deficit of $71,193,862 and a working capital deficit of $13,371,094 at February
28, 2013, net losses for the year ended February 28, 2013 of $4,233,102 and cash used in operations during the year ended February
28, 2013 of $5,244,316. 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 its planned Interactive and Video on Demand and RealBiz
platforms Management and Board members are working aggressively to increase the viewership of our products by promoting it across
other mediums which will increase value to advertisers and result in higher advertising rates and revenues.





F-16





Note 2 - Going Concern (continued)



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.



Note 3 – Property
and Equipment



As of February 28, 2013 and February 29,
2012 respectively, the Company did not record property and equipment on its books and records. Any property and equipment previously
recorded was fully impaired and written off. Therefore, there was no depreciation expense recorded for the years ended February
28, 2013 and February 29, 2012.



Note 4 – Website Development Costs and Intangible
Assets



The following table sets forth the intangible
assets, both acquired and developed, including accumulated amortization:



|                          |  | February 28, 2013
|------------------------- |  | -----------------
|                          |  | Remaining        
|                          |  | Useful Life      
|                          |  |                  
|Supplier Relationships    |  | 0.0 years        
|Technology                |  | 0.0 years        
|Sales/Marketing Agreement |  | 3.1 years        
|Website development costs |  | 0.7 years        
|Trade Name                |  | 0.0 years        
|                          |  |                  



|                          |  | February 29, 2012
|------------------------- |  | -----------------
|                          |  | Remaining        
|                          |  | Useful Life      
|                          |  |                  
|Supplier Relationships    |  | 0.0 years        
|Technology                |  | 0.0 years        
|Website development costs |  | 1.4 years        
|Trade Name                |  | 0.0 years        
|                          |  |                  



Intangible assets are amortized on a straight-line
basis over their expected useful lives, estimated to be up to 7 years, except for the web site which is 3 years. Amortization
expense related to intangible assets was $604,008 and $1,222,861 for the years ended February 28, 2013 and February 29, 2013,
respectively.



Note 5 – Acquisitions



On October 3, 2012, the Company entered
a securities exchange agreement and exercised the option purchase agreement to purchase 664.1 common shares of Real Biz Holdings,
Inc. The Company applied $300,000 of cash, issued a Series D Preferred stock subscription agreement for 380,000 shares and agreed
to a $50,000 thirty day (30) day post closing final buyout bringing the total value of the agreement to $2,250,000.



The Company accounted for the acquisition
utilizing the purchase method of accounting in accordance with ASC 805 "Business Combinations". The Company is the acquirer
for accounting purposes and Real Biz Holdings, Inc. is the acquired Company. Accordingly, the Company applied push-down accounting
and adjusted to fair value all of the assets and liabilities directly on the financial statements of the subsidiary, Real Biz
Holdings, Inc.



F-17







Note 5 – Acquisitions (continued)



The net purchase price, including acquisition
costs paid by the Company, was allocated to assets acquired and liabilities assumed on the records of the Company as follows:



|Cash                                                                |  | $ | 34,366    | 
|------------------------------------------------------------------- |  | - | --------- | 
|Other current assets                                                |  |   | 40,696    | 
|Intangible asset                                                    |  |   | 4,796,178 | 
|                                                                    |  |   | 4,871,240 | 
|                                                                    |  |   |           | 
|Accounts payable, accrued expenses and other miscellaneous payables |  |   | 2,330,846 | 
|Deferred revenue                                                    |  |   | 48,569    | 
|Convertible notes payable to officer                                |  |   | 241,825   | 
|                                                                    |  |   | 2,621,240 | 
|Net purchase price                                                  |  | $ | 2,250,000 | 



Unaudited pro forma results of operations data as if the Company,
Real Biz Holdings, Inc. and RealBiz Media Group, Inc. had occurred as of March 1, 2012 are as follows:



|                                               |  | The Company, Real Biz Holdings, Inc and RealBiz
    Media Group, Inc. |           |  | The Company, Real Biz Holdings, Inc and RealBiz
    Media Group, Inc. |  
|---------------------------------------------- |  | --------------------------------------------------------------------- | --------- |  | --------------------------------------------------------------------- | -
|                                               |  | For the year ended                                                    |           |  | For the year ended                                                    |  
|                                               |  | February 28, 2013                                                     |           |  | February 29, 2012                                                     |  
|                                               |  |                                                                       |           |  |                                                                       |  
|Pro forma revenue                              |  | $                                                                     | 1,743,620 |  |                                                                       | $
|                                               |  |                                                                       |           |  |                                                                       |  
|Pro forma loss from operations                 |  | $                                                                     | 5,388,815 |  |                                                                       | $
|                                               |  |                                                                       |           |  |                                                                       |  
|Pro forma net loss                             |  | $                                                                     | 4,850,543 |  |                                                                       | $
|                                               |  |                                                                       |           |  |                                                                       |  
|Pro forma basic and diluted net loss per share |  | $                                                                     | 0.65      |  |                                                                       | $





On October 9, 2012, our Company, Next 1 Interactive, Inc., a
Nevada corporation (“Next 1”) and RealBiz Media Group, Inc., formerly known as Webdigs, Inc. (“Webdigs”),
, completed the transactions contemplated by that certain Share Exchange Agreement entered into on April 4, 2012 (the “Exchange
Agreement”). Under the Exchange Agreement, our Company exchanged with Webdigs all of the outstanding equity in Attaché
Travel International, Inc., a Florida corporation and wholly owned subsidiary of Next 1 (“Attaché”). Attaché
owns approximately 85% of a corporation named RealBiz Holdings Inc. which is the parent corporation of RealBiz360, Inc. (“RealBiz”).
RealBiz is a real estate media services company whose proprietary video processing technology has made it one of the leaders in
providing home virtual tours to the real estate industry. In exchange for our Attaché shares, our Company received a total
of 93 million shares of newly designated Series A Convertible Preferred Stock (“Webdigs Series A Stock”). The exchange
of Attaché shares in exchange for Webdigs Series A Stock is referred to as the “Exchange Transaction.”







Note 6 - Accounts Payable and Accrued Expenses



Accounts payable and accrued expenses consist of the following,
respectively:



|                           |  | February 28, |           |  | February 29, |  
|-------------------------- |  | ------------ | --------- |  | ------------ | -
|                           |  | 2013         |           |  | 2012         |  
|                           |  |              |           |  |              |  
|Trade accounts payable (1) |  | $            | 2,518,160 |  |              | $
|Accrued interest           |  |              | 533,456   |  |              |  
|Deferred salary            |  |              | 76,891    |  |              |  
|Accrued expenses - other   |  |              | 145,826   |  |              |  
|                           |  | $            | 3,274,333 |  |              | $



| | (1) | Included in the accounts payable balance is a $615,264 amount
                                                                 due to principals of an advertising company that holds a 1.6%
                                                                 minority interest of outstanding shares in RealBiz Media Group,
                                                                 Inc. as of February 28, 2013.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-18







Note 7 – Notes Payable



On May 28, 2010, the Company entered into
a settlement agreement (the “Agreement”) by and among the Company and Televisual Media, a Colorado limited liability
company, TV Ad Works, LLC, a Colorado limited liability company, TV Net Works, a Colorado limited liability company, TV iWorks,
a Colorado limited liability and Mr. Gary Turner and Mrs. Staci Turner, individuals residing in the State of Colorado (individually
and collectively “TVMW,” and together with the Company, the “Parties”), in order to resolve certain disputed
claims regarding the service agreements referred to above. The final settlement agreement stipulates that the settlement shall
not be construed as an admission or denial of liability by any party hereto.



On March 23, 2011, the Company entered
into a debt purchase agreement whereby $65,000 of certain aged debt evidenced by a Settlement Agreement dated May 28, 2010 for
$1,000,000 with a remaining balance of $815,000, was purchased by a non-related third party investor. As part of the agreement,
the Company received $65,000 in consideration for issuing a 6 month, 21% convertible promissory note, with a face value of $68,500,
maturing on September 23, 2011. On August 31, 2011, the noteholder entered into a wrap around agreement to assign $485,000 of
its debt to investors and immediately assigned $50,000 of its principal to a non-related third party investor and the Company
issued a secured convertible promissory note for the same value.



On September 6,
2011, the Company re-negotiated the settlement agreement note, due to default, until February 1, 2013 for $785,000. Beginning
on October 1, 2011, the Company shall make payments of $50,000 due on the first day of each month. The first $185,000 in payments
shall be in cash and the remaining $600,000 shall be made in cash or common stock. On February 15, 2012, the noteholder assigned
$225,000 of its $785,000 outstanding promissory note to a non- related third party investor and the Company issued a new convertible
promissory note for the same value. As of February 28, 2013, the remaining principal balance is $510,000 and the note is in default.



On August 16, 2004, the Company entered
into a promissory note with an unrelated third party for $500,000. The note bears interest at 7% per year and matured in March
2011 and is payable in quarterly installments of $25,000. As of February 28, 2013, the remaining principal balance is $167,942
and un-paid accrued interest is $139,120. The Company is in default of this note.



In February 2009, the Company restructured
note agreements with three existing noteholders. The collective balance at the time of the restructuring was $250,000 plus accrued
interest payable of $158,000, consolidated into three new notes payable totaling $408,000. The notes bear interest at 10% per
year and matured on May 31, 2010, at which time the total amount of principle and accrued interest was due. In connection with
the restructure of these notes the Company issued 150,000 detachable 3 year warrants to purchase common stock at an exercise price
of $3.00 per share. The warrant issuance was recorded as a discount and amortized monthly over the terms of the note. On July
30, 2010, the Company issued 535,000 shares of common stock to settle all of these note agreements except for $25,000 of principal
and $5,543 of un-paid interest still owed as of February 28, 2013 and the Company is in default of this note.



In connection with the acquisition of
Brands on Demand, an officer of the Company entered into a five-year lease agreement. Subsequent to terminating the officer, the
Company entered into an early termination agreement with the lessor valued at $30,000 secured by a promissory note with monthly
installments of $2,500, beginning June 1, 2009 and maturing June 1, 2010. As of February 28, 2013, the Company has not made any
installment payments on this obligation and the remaining principal balance of the note is $30,000, un-paid accrued interest is
$11,801 and the Company is in default of this note.



On June 15, 2011, the Company received
$100,000 in consideration for issuing a six month interest free $106,000 promissory note maturing November 25, 2011, incurring
a one-time fee of $6,000. The payments shall be due and payable as follows: $26,500 on August 15, 2011; 26,500 on September 26,
2011; $26,500 on October 25, 2011; and $26,500 on November 25, 2011. On July 17, 2012, the Company entered an exchange agreement
whereby a noteholder converted several promissory notes totaling $278,000 into one new convertible promissory note and additionally
the Company received $200,000 from the same third-party investor and issued a convertible promissory note valued at $478,000.



On December 5, 2011, the Company converted
$252,833 of accounts payable and executed a 8% promissory note to same vendor. Commencing on December 5, 2011 and continuing on
the 1st day of each calendar month thereafter, the Company shall pay $12,000 per month. All payments shall be applied first to
payment in full of any costs incurred in the collection of any sum due under this Note, including, without limitation, reasonable
attorney's fee, then to payment in full of accrued and unpaid interest and finally to the reduction of the outstanding principal
balance of the Note. As of February 28, 2013, the remaining principal balance is $221,129 and unpaid accrued interest is $11,762.
The Company is in default of this note.



The total of $954,072 in principal of the above debt is currently
past due. Interest charged to operations relating to these notes was $38,086 and $67,122, respectively for the years ended February
28, 2013 and February 29, 2012.



Note 8 – Capital Lease Payable



On June 1, 2006, the Company entered into
a five (5) year equipment lease agreement requiring monthly payments of $5,078 including interest at approximately 18% per year
and expires on June 1, 2011with a related party. On September 3, 2010, the Company amended the original agreement to procure $56,671
of additional equipment. The Company extended the maturity to September 1, 2012 and all other lease terms remained unchanged.
As of February 28, 2013, the Company has satisfied all the terms of the lease agreement. Interest expense on the lease was $1,208
and $9,705 for the years ended February 28, 2013 and February 29, 2012, respectively.



F-19







Note 9 – Other Notes Payable



Related Party



A director and officer had advanced
funds to the Company since inception. During the year ending February 29, 2012, the Company repaid $23,284 owed to the
director/officer. As of February 28, 2013 and February 29, 2012, the Company does not have any principal balance due to the
officer/director, however there is an unpaid accrued interest balance totaling $1,638. The interest rate is 18% per annum
compounded daily, on the unpaid balance. Interest expense recognized for the years ended February 28, 2013 and February 29,
2012 is $270 and $533, respectively.



An individual that is related to an
existing director/officer has advanced funds to the Company since inception.
As of February 28, 2013 and February 29, 2012, the Company does not have any principal or accrued interest due to this individual. On September 6, 2011, the noteholder converted $18,000 of principal and the Company issued 2,400 shares
of common stock. On October 12, 2011, the noteholder converted the remaining principal balance (plus accrued interest) and the
Company issued 2,063 shares of common stock. Interest
expense recognized for the years ended February 28, 2013 and February 29, 2012 is $-0- and $2,238, respectively.



An unrelated entity where
the director/officer is president has advanced funds to the Company since inception. During During the year ending February
29, 2012, the Company repaid $4,853 reducing the balance owed down to $-0-. As of February 28, 2013 and February 29, 2012,
the Company does not have any principal balance due to this entity, however there is an unpaid accrued interest balance
totaling $11,422. Interest expense recognized for the years ended February 28, 2013 and February 29, 2012 is $1,881 and
$2,331 respectively.



On August 21, 2012, the Company received
$50,000 in proceeds from a board member and issued a bridge loan agreement with no maturity date. In lieu of interest, the Company
issued 100,000 two (2) year warrants with an exercise price of $0.05 per share valued at $1,500 and charged to operations. 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 of 0.29%, dividend yield of -0-%, volatility factor of 384.11% and expected life of 2 years.
Interest expense recognized for the years ended February 28, 2013 and February 29, 2012 is $1,500 and $-0-, respectively.



On January 23, 2013, the Company received
$75,000 in proceeds from a related-party investor and issued a 6 % promissory note maturing on April 30, 2013. The Company issued
375,000 one (1) year warrants with an exercise price of $0.03 per share valued at $5,213 and charged as interest expense to operations.
The Company uses the Black-Scholes option-pricing model to determine the warrant’s fair value using the following assumptions:
risk-free interest rate of 0.15%, dividend yield of -0-%, volatility factor of 354.79% and expected life of 1year. Interest expense
recognized for the years ended February 28, 2013 and February 29, 2012 is $5,213 and $-0-, respectively.



Non Related Party



On March 5, 2010, the Company entered
into a promissory note with a director (“holder”) of the Company.  Pursuant to the note, the holder agreed
to loan the Company up to $3,500,000. The note had an effective date of January 25, 2010 and a maturity date of January 25, 2011.
The note bears interest at 6% per annum and as an incentive, the Company, on April 30, 2010, issued 850,000 warrants to the holder with
a six-year life and a fair value of approximately $175,000 to purchase shares of the Company’s common stock, $0.00001 par
value, per share, at an exercise price of $1.00 per share. As part of the original agreement on July 12, 2010, the Company issued
100,000 warrants to the holder with a three-year life and a fair value of approximately $22,372 to purchase shares of the
Company’s common stock, $0.00001 par value, per share, at an exercise price of $1.00 per share. Additionally, on July 23,
2010, the Company issued 100,000 warrants to the holder with a six-year life and a fair value of approximately $33,427 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 between 0.94% and 1.51%, dividend yield of -0-%, volatility factor between 115.05% and 124.65%
and an expected life of 1.5 years.



The fair value of warrants is amortized
as finance fees over the term of the loan. The Company recorded approximately $230,880 in prepaid finance fees upon origination
and was fully amortized. Interest expense recognized for the years ended February 28, 2013 and February 29, 2012 is $-0- and $4,060,
respectively. On March 11, 2011, the Company entered into a termination agreement with the noteholder where upon the note holder
exercised 1,050,000 warrants into common shares, converted $450,000 of principal owed under the current note into 2,250,000 common
shares, executed a new convertible promissory note of $500,000 and $25,000 was applied as a credit against a stock subscription
of the noteholder's daughter.



On March 5, 2010, the Company entered
into a promissory note with a former director (“holder”) of the Company.  Pursuant to the note, the holder
agreed to loan the Company $3,500,000. The note had an effective date of January 25, 2010 and a maturity date of January 25, 2011.
The note bears interest at 6% per annum.   Previous to entering into this agreement and as an incentive, the Company,
on January 27, 2010, issued 7,000,000 warrants to the holder with a six-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 of 1.46%, dividend yield of -0-%, volatility factor of 136.1% and an expected life of 1.5 years. The fair
value of warrants is amortized as finance fees over the term of the loan. The Company recorded approximately $2.3 million in prepaid
finance fees upon origination and was fully amortized. Interest expense recognized for the years ended February 28, 2013 and February
29, 2012 is $-0- and $46,369, respectively. During March 2011, the Company received $130,000 in advances from the former director
(holder) of which the Company repaid $130,000. On April 15, 2011 the former note, plus accrued interest was converted into six
convertible promissory notes totaling $6,099,526.



F-20







Note 9 – Other Notes Payable
(continued)



Non Related Party (continued)



The Company has an existing promissory
note, dated July 23, 2010, with a shareholder in the amount of $100,000. The note was due and payable on July 23, 2011 and bore
interest at rate of 6% per annum. As consideration for the loan, the Company issued 200 warrants to the holder with a three
year life and a fair value of approximately $33,000 to purchase shares of the Company’s common stock, $0.00001 par value,
per share, at an exercise price of $500 per share. On September 26, 2011, the noteholder assigned $30,000 of its principal to
a non-related third party investor and the Company issued a convertible promissory note for same value, leaving a remaining balance
of $70,000 as of February 28, 2013. As of February 28, 2013, the principal balance of this note is in default. 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 of 0.984%, dividend yield of -0-%, volatility factor of 115.05% and an expected life of 1.5 years. The
fair value of warrants is amortized as finance fees over the term of the loan. The Company recorded approximately $33,000 in prepaid
finance fees upon origination and amortized approximately $-0- and $13,279 in expense, respectively for the years ended February
28, 2013 and February 29, 2012. Interest charged to operations relating to this note was $4,905 and $5,650, respectively for the
years ended February 28, 2013 and February 29, 2012.



Note 10 – Other Advances



Related Party



During the year ended February 28,
2013 and February 29, 2012, the Company incurred no activity and the remaining principal balance is $18,000.



Non Related Party



During the year ended February 28,
2013 and February 29, 2012, the Company incurred no activity and the remaining principal balance is $50,000.



Note 11 – Shareholder Loans



During the year ended February 28, 2013,
the Company:



| | · | Received
                                                                                                               $843,000 in proceeds
                                                                                                               for shareholder
                                                                                                               advances. Of this
                                                                                                               amount, $608,000
                                                                                                               was designated
                                                                                                               for Series B Preferred
                                                                                                               Stock subscriptions
                                                                                                               together with $130,000
                                                                                                               received in the
                                                                                                               previous year ended
                                                                                                               February 29, 2012,
                                                                                                               resulting in Company
                                                                                                               then issuing 147,600
                                                                                                               shares of Series
                                                                                                               B Preferred Stock
                                                                                                               subscriptions with
                                                                                                               a total value of
                                                                                                               $738,000.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Made
                                                                                                               payments totaling
                                                                                                               $20,000 against
                                                                                                               outstanding shareholder
                                                                                                               advances.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Issued
                                                                                                               85,000 shares of
                                                                                                               Series A Preferred
                                                                                                               stock in satisfaction
                                                                                                               of $85,000 of shareholder
                                                                                                               advances as part
                                                                                                               of a $481,403 exchange
                                                                                                               agreement with
                                                                                                               a related-party
                                                                                                               shareholder.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Issued
                                                                                                                                 32,000
                                                                                                                                 shares
                                                                                                                                 of
                                                                                                                                 Series
                                                                                                                                 D
                                                                                                                                 Preferred
                                                                                                                                 Stock
                                                                                                                                 in
                                                                                                                                 satisfaction
                                                                                                                                 of
                                                                                                                                 a
                                                                                                                                 $160,000
                                                                                                                                 of
                                                                                                                                 outstanding
                                                                                                                                 shareholder
                                                                                                                                 balances.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Entered
                                                                                                                                 an
                                                                                                                                 agreement
                                                                                                                                 with
                                                                                                                                 a
                                                                                                                                 third-party
                                                                                                                                 investor
                                                                                                                                 to
                                                                                                                                 convert
                                                                                                                                 $225,000
                                                                                                                                 of
                                                                                                                                 shareholder
                                                                                                                                 advances
                                                                                                                                 in
                                                                                                                                 addition
                                                                                                                                 to
                                                                                                                                 accrued
                                                                                                                                 unpaid
                                                                                                                                 interest
                                                                                                                                 of
                                                                                                                                 $280,000
                                                                                                                                 on
                                                                                                                                 various
                                                                                                                                 existing
                                                                                                                                 convertible
                                                                                                                                 promissory
                                                                                                                                 notes
                                                                                                                                 combining
                                                                                                                                 them
                                                                                                                                 into
                                                                                                                                 a
                                                                                                                                 new
                                                                                                                                 6%
                                                                                                                                 convertible
                                                                                                                                 promissory
                                                                                                                                 note
                                                                                                                                 valued
                                                                                                                                 at
                                                                                                                                 $505,000
                                                                                                                                 with
                                                                                                                                 a
                                                                                                                                 maturity
                                                                                                                                 date
                                                                                                                                 of
                                                                                                                                 October
                                                                                                                                 15,
                                                                                                                                 2014.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The remaining balance as of February 28, 2013 totaled $445,000.







During the year ended February 29, 2012,
the Company:



| | · | received cash advances amounting to $1,419,000
from shareholders while incurring transaction fees totaling $11,000.
| | - | -------------------------------------------------------------------------------------------------------------------



| | · | issued 9,001 shares in common stock and
13,628 warrants as $636,393 of shareholder loans were converted into equity instruments and $721,000 was converted into convertible
promissory notes.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | assigned a shareholder of $275,000 to
a third party investor creating a convertible promissory note.
| | - | ----------------------------------------------------------------------------------------------------





The remaining principal balance as of February
29, 2012 totaled $840,000.



F-21











Note 12 – Settlement agreements



On December 1, 2012, the Company entered into a settlement
agreement with two convertible promissory note holders and agreed to a series of payments totaling $149,917. The creditor's relieved
the Company of $145,000 in principal and $32,463 in accrued interest recognizing a gain on settlement of debt for $27,546 and
agreed to the following payment schedule on or before:



|December 10, 2012 |  | $ | 25,750 | 
|----------------- |  | - | ------ | 
|December 21, 2012 |  | $ | 25,000 | 
|January 31, 2013  |  | $ | 35,000 | 
|February 28, 2013 |  | $ | 35,000 | 
|March 31, 2013    |  | $ | 29,167 | 



As of February 28, 2013 the remaining balance due is $64,167.



On December 5, 2012, the Company entered into a settlement
agreement with a convertible promissory note holder and agreed to a single payment of $42,849 to cancel the remaining balance.
The creditor relieved the Company of $57,135 in principal and $5,154 in accrued interest, recognizing a gain on settlement of
debt for $19,440.



Note 13 – Convertible Promissory Notes



During the year ended February 28, 2013,
the Company received a total of $744,500 of proceeds of which $344,500 came from non-related third party investors and $400,000
came from related party investors. In turn, the Company issued convertible promissory notes with interest rates ranging from 6%
to 12% per annum, maturity dates ranging from September 30, 2012 to October 15, 2014, with various conversion features and 450,000
one (1) year warrants with an exercise price of $0.05.



F-22









Note 13 – Convertible
Promissory Notes
(continued)



During the year ended February 28, 2013, the Company incurred $31,000 in fees for debt assignments and $99,100 of penalties for late conversions for various
note holders, increasing each respective noteholder’s principal balance. During the year ended February 28, 2013, the
Company converted $280,000 of accrued interest, $225,000 of shareholder loans and $53,000 of notes payable into convertible
promissory notes. Additionally, various noteholders assigned $486,600 of principal to new non-related third party investors.
In turn, the Company issued $486,600 of convertible promissory notes with interest rates of 6% per annum, maturity dates
ranging from February 1, 2013 to December 31, 2013 and with various conversion features.



During the year ended February 28, 2013,
various noteholders voluntarily converted $1,648,463 of principal and the Company issued 11,442,205 shares of its Common Stock,
481,403 shares of Preferred Series A and 185,129 shares of Preferred Series D. Additionally, a noteholder cancelled $6,000 of
its principal balance through an amendment of its convertible promissory note. The Company also came to terms with three non-related
party note holders and entered into settlement agreements reducing their principal balances by $202,135.



During the year ended February 28, 2013,
the Company recognized $194,664 in debt discount due to the embedded variable conversion features within various notes incurred
and an initial derivative liability recorded. The Company used the Black-Scholes option-pricing model to calculate the initial
fair value of the derivatives with the following assumptions: risk-free interest rates from 0.14% to 0.27%, dividend yield of
-0-%, volatility factor from 282.18% to 397.14% and expected life from 8 to 25 months. Amortization of debt discount during
the years ending February 28, 2013 and February 29, 2012 was $1,089,639 and 5,829,615, respectively.



During the years ended February 28, 2013
and February 29, 2012, the Company recognized a gain on the change in fair value of derivatives in the amounts of $2,081,029 and
$2,223,649, respectively. The Company determines the fair value of the embedded conversion option liability using the Black-Scholes
option-pricing model with the following assumptions: risk-free interest rates from 0.07% to 0.25%, dividend yield of -0-%, volatility
factor of 33.29 % to 438.93% and expected life from one to 24 months.



Below is a summary of the convertible promissory notes as of
February 28, 2013:



|                  |  | Remaining Principal
    Balance |           |  | Un-Amortized Debt Discount |   |        | Carrying Value |  |   | Principal Past Due | 
|----------------- |  | ------------------------------- | --------- |  | -------------------------- | - | ------ | -------------- |  | - | ------------------ | 
|Non-Related Party |  |                                 |           |  |                            |   |        |                |  |   |                    | 
|Current           |  | $                               | 7,485,605 |  |                            | $ | 6,777  |                |  | $ | 7,478,828          | 
|Long term         |  |                                 | 59,635    |  |                            |   | 22,694 |                |  |   | 36,941             | 
|                  |  |                                 |           |  |                            |   |        |                |  |   |                    | 
|                  |  |                                 | 7,545,240 |  |                            |   | 29,471 |                |  |   | 7,515,769          | 
|                  |  |                                 |           |  |                            |   |        |                |  |   |                    | 
|Related Party     |  |                                 |           |  |                            |   |        |                |  |   |                    | 
|Current           |  |                                 | 650,000   |  |                            |   | -0-    |                |  |   | 650,000            | 
|Long term         |  |                                 | -0-       |  |                            |   | -0-    |                |  |   | -0-                | 
|                  |  |                                 | 650,000   |  |                            |   | -0-    |                |  |   | 650,000            | 
|                  |  |                                 |           |  |                            |   |        |                |  |   |                    | 
|                  |  | $                               | 8,195,240 |  |                            | $ | 29,471 |                |  | $ | 8,165,769          | 



Interest rates ranged from 5.0% to 12.0% and maturity dates
ranged from September 30, 2012 to October 15, 2014. During year ended February 28, 2013 and February 29, 2012, the Company recognized
interest expense of $592,471 and $500,529, respectively.





For the year ended
February 29, 2012



Presented below is a tabled
presentation of the Company’s secured convertible promissory notes for the year ended February 29, 2012. Each table consists
of non- related and related party activity. Table two discloses conversion terms, debt discount and related amortization of debt
discount. Table three discloses notes requiring calculation of derivative liabilities and changes in the fair market value.



F-23





Note 13 – Convertible Promissory
Notes (continued)







Table 1





Non-Related Party:

|Original
        Date |  |  | Note
                                                                                                      # |  |  | Principal or
    
    Value 
    Received |           |  | Maturity
        Date |          | Interest
    
    Rate |  |      | Principal
    
    Balance 
    2/29/12 |  |   | Un-Amortized
    
    Debt Discount 
    2/29/12 |  |  | Carrying
    
    Value 
    2/29/12 |         |  | Interestexpense for the year ended2/29/12 |  
|--------------------- |  |  | ------------------------------------------------------------------------------------------------------------ |  |  | ----------------------------------------- | --------- |  | --------------------- | -------- | ---------------------- |  | ---- | --------------------------------------- |  | - | ------------------------------------------------ |  |  | ------------------------------------ | ------- |  | ----------------------------------------- | -
|12/14/10              |  |  | 1                                                                                                            |  |  | $                                         | 50,000    |  |                       | 3/14/11  |                        |  | 10.0 | %                                       |  | $ | -0-                                              |  |  | $                                    | -0-     |  |                                           | $
|12/17/10              |  |  | 2                                                                                                            |  |  |                                           | 250,000   |  |                       | 3/20/11  |                        |  | 10.0 | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|1/11/11               |  |  | 3                                                                                                            |  |  |                                           | 200,000   |  |                       | 2/11/11  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|1/11/11               |  |  | 4                                                                                                            |  |  |                                           | 117,200   |  |                       | 1/10/12  |                        |  | 5.0  | %                                       |  |   | 8,912                                            |  |  |                                      | -0-     |  |                                           |  
|2/18/11               |  |  | 5                                                                                                            |  |  |                                           | 50,000    |  |                       | 3/11/11  |                        |  | 0.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|2/14/11               |  |  | 6                                                                                                            |  |  |                                           | 25,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 25,000                                           |  |  |                                      | -0-     |  |                                           |  
|2/14/11               |  |  | 7                                                                                                            |  |  |                                           | 25,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 25,000                                           |  |  |                                      | -0-     |  |                                           |  
|2/14/11               |  |  | 8                                                                                                            |  |  |                                           | 25,000    |  |                       | 5/31/12  |                        |  | 0.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|1/25/11               |  |  | 9                                                                                                            |  |  |                                           | 85,000    |  |                       | 10/27/11 |                        |  | 8.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|3/11/11               |  |  | 10                                                                                                           |  |  |                                           | 100,000   |  |                       | 3/11/11  |                        |  | 0.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|3/11/11               |  |  | 11                                                                                                           |  |  |                                           | 100,000   |  |                       | 3/11/11  |                        |  | 0.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|3/11/11               |  |  | 12                                                                                                           |  |  |                                           | 25,000    |  |                       | 3/11/11  |                        |  | 0.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|3/14/11               |  |  | 13                                                                                                           |  |  |                                           | 50,000    |  |                       | 12/16/11 |                        |  | 8.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|3/17/11               |  |  | 14                                                                                                           |  |  |                                           | 500,000   |  |                       | 4/6/12   |                        |  | 6.0  | %                                       |  |   | 185,000                                          |  |  |                                      | -0-     |  |                                           |  
|3/23/11               |  |  | 15                                                                                                           |  |  |                                           | 68,500    |  |                       | 9/23/11  |                        |  | 21.0 | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|4/15/11               |  |  | 17                                                                                                           |  |  |                                           | 4,388,526 |  |                       | 4/15/12  |                        |  | 6.0  | %                                       |  |   | 4,385,326                                        |  |  |                                      | 306,158 |  |                                           |  
|4/15/11               |  |  | 18                                                                                                           |  |  |                                           | 1,500,000 |  |                       | 4/15/12  |                        |  | 6.0  | %                                       |  |   | 744,000                                          |  |  |                                      | -0-     |  |                                           |  
|4/15/11               |  |  | 19                                                                                                           |  |  |                                           | 211,000   |  |                       | 4/15/12  |                        |  | 6.0  | %                                       |  |   | 211,000                                          |  |  |                                      | 14,773  |  |                                           |  
|5/15/11               |  |  | 20                                                                                                           |  |  |                                           | 100,000   |  |                       | 5/15/12  |                        |  | 6.0  | %                                       |  |   | 100,000                                          |  |  |                                      | -0-     |  |                                           |  
|5/13/11               |  |  | 21                                                                                                           |  |  |                                           | 150,000   |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|5/16/11               |  |  | 22                                                                                                           |  |  |                                           | 225,000   |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|6/1/11                |  |  | 23                                                                                                           |  |  |                                           | 25,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 25,000                                           |  |  |                                      | -0-     |  |                                           |  
|6/1/11                |  |  | 24                                                                                                           |  |  |                                           | 150,000   |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 150,000                                          |  |  |                                      | -0-     |  |                                           |  
|6/16/11               |  |  | 25                                                                                                           |  |  |                                           | 60,000    |  |                       | 3/20/12  |                        |  | 8.0  | %                                       |  |   | 28,000                                           |  |  |                                      | 4,272   |  |                                           |  
|5/23/11               |  |  | 28                                                                                                           |  |  |                                           | 46,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|6/27/11               |  |  | 29                                                                                                           |  |  |                                           | 100,000   |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|7/12/11               |  |  | 30                                                                                                           |  |  |                                           | 50,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 50,000                                           |  |  |                                      | -0-     |  |                                           |  
|6/15/11               |  |  | 31                                                                                                           |  |  |                                           | 75,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 75,000                                           |  |  |                                      | -0-     |  |                                           |  
|6/15/11               |  |  | 32                                                                                                           |  |  |                                           | 150,000   |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 150,000                                          |  |  |                                      | -0-     |  |                                           |  
|8/12/11               |  |  | 33                                                                                                           |  |  |                                           | 50,000    |  |                       | 7/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|8/24/11               |  |  | 34                                                                                                           |  |  |                                           | 80,000    |  |                       | 7/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|8/12/11               |  |  | 35                                                                                                           |  |  |                                           | 50,000    |  |                       | 7/31/12  |                        |  | 6.0  | %                                       |  |   | 18,000                                           |  |  |                                      | -0-     |  |                                           |  
|8/15/11               |  |  | 37                                                                                                           |  |  |                                           | 17,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|8/15/11               |  |  | 38                                                                                                           |  |  |                                           | 15,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 15,000                                           |  |  |                                      | -0-     |  |                                           |  
|8/15/11               |  |  | 39                                                                                                           |  |  |                                           | 10,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|8/15/11               |  |  | 40                                                                                                           |  |  |                                           | 10,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 10,000                                           |  |  |                                      | -0-     |  |                                           |  
|8/15/11               |  |  | 42                                                                                                           |  |  |                                           | 25,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 25,000                                           |  |  |                                      | -0-     |  |                                           |  
|8/15/11               |  |  | 43                                                                                                           |  |  |                                           | 10,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 10,000                                           |  |  |                                      | -0-     |  |                                           |  
|8/15/11               |  |  | 44                                                                                                           |  |  |                                           | 13,000    |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|7/26/11               |  |  | 46                                                                                                           |  |  |                                           | 45,000    |  |                       | 7/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|8/3/11                |  |  | 47                                                                                                           |  |  |                                           | 45,000    |  |                       | 7/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|10/5/11               |  |  | 48                                                                                                           |  |  |                                           | 50,000    |  |                       | 9/30/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|9/2/11                |  |  | 50                                                                                                           |  |  |                                           | 40,000    |  |                       | 5/31/12  |                        |  | 8.0  | %                                       |  |   | 40,000                                           |  |  |                                      | -0-     |  |                                           |  
|10/14/11              |  |  | 51                                                                                                           |  |  |                                           | 83,000    |  |                       | 7/31/12  |                        |  | 8.0  | %                                       |  |   | 83,000                                           |  |  |                                      | -0-     |  |                                           |  
|9/27/11               |  |  | 52                                                                                                           |  |  |                                           | 275,000   |  |                       | 8/31/12  |                        |  | 12.0 | %                                       |  |   | 86,000                                           |  |  |                                      | -0-     |  |                                           |  
|10/13/11              |  |  | 53                                                                                                           |  |  |                                           | 100,000   |  |                       | 9/30/12  |                        |  | 6.0  | %                                       |  |   | 6,100                                            |  |  |                                      | 6,100   |  |                                           |  
|9/26/11               |  |  | 54                                                                                                           |  |  |                                           | 75,000    |  |                       | 8/31/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|10/13/11              |  |  | 56                                                                                                           |  |  |                                           | 50,000    |  |                       | 9/30/12  |                        |  | 6.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|11/11/11              |  |  | 57                                                                                                           |  |  |                                           | 236,702   |  |                       | 9/30/12  |                        |  | 8.0  | %                                       |  |   | 153,188                                          |  |  |                                      | 65,261  |  |                                           |  
|9/26/11               |  |  | 58                                                                                                           |  |  |                                           | 135,000   |  |                       | 9/26/12  |                        |  | 12.0 | %                                       |  |   | 135,000                                          |  |  |                                      | -0-     |  |                                           |  
|1/4/12                |  |  | 59                                                                                                           |  |  |                                           | 100,000   |  |                       | 4/15/12  |                        |  | 6.0  | %                                       |  |   | 100,000                                          |  |  |                                      | 10,810  |  |                                           |  
|1/4/12                |  |  | 61                                                                                                           |  |  |                                           | 115,000   |  |                       | 12/31/12 |                        |  | 6.0  | %                                       |  |   | 115,000                                          |  |  |                                      | 38,764  |  |                                           |  
|11/28/11              |  |  | 62                                                                                                           |  |  |                                           | 100,000   |  |                       | 10/31/12 |                        |  | 6.0  | %                                       |  |   | 83,000                                           |  |  |                                      | 72,472  |  |                                           |  
|12/1/11               |  |  | 63                                                                                                           |  |  |                                           | 100,000   |  |                       | 12/1/12  |                        |  | 6.0  | %                                       |  |   | 60,000                                           |  |  |                                      | 60,000  |  |                                           |  
|11/11/11              |  |  | 64                                                                                                           |  |  |                                           | 165,360   |  |                       | 2/3/12   |                        |  | 6.0  | %                                       |  |   | 80,394                                           |  |  |                                      | -0-     |  |                                           |  
|12/6/11               |  |  | 65                                                                                                           |  |  |                                           | 200,000   |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 200,000                                          |  |  |                                      | -0-     |  |                                           |  
|12/12/11              |  |  | 66                                                                                                           |  |  |                                           | 100,000   |  |                       | 11/30/12 |                        |  | 8.0  | %                                       |  |   | 100,000                                          |  |  |                                      | -0-     |  |                                           |  
|12/29/11              |  |  | 67                                                                                                           |  |  |                                           | 100,000   |  |                       | 11/30/12 |                        |  | 6.0  | %                                       |  |   | 35,235                                           |  |  |                                      | 35,235  |  |                                           |  
|1/16/12               |  |  | 68                                                                                                           |  |  |                                           | 25,000    |  |                       | 12/31/12 |                        |  | 6.0  | %                                       |  |   | 20,250                                           |  |  |                                      | 20,250  |  |                                           |  
|1/13/12               |  |  | 69                                                                                                           |  |  |                                           | 41,000    |  |                       | 7/15/12  |                        |  | 8.0  | %                                       |  |   | 32,500                                           |  |  |                                      | 19,650  |  |                                           |  
|1/13/12               |  |  | 70                                                                                                           |  |  |                                           | 35,000    |  |                       | 12/31/12 |                        |  | 6.0  | %                                       |  |   | 30,250                                           |  |  |                                      | 26,971  |  |                                           |  
|2/17/12               |  |  | 71                                                                                                           |  |  |                                           | 75,000    |  |                       | 2/17/13  |                        |  | 10.0 | %                                       |  |   | 75,000                                           |  |  |                                      | 72,540  |  |                                           |  
|2/9/12                |  |  | 72                                                                                                           |  |  |                                           | 10,000    |  |                       | 2/28/14  |                        |  | 10.0 | %                                       |  |   | 10,000                                           |  |  |                                      | 1,940   |  |                                           |  
|1/12/12               |  |  | 73                                                                                                           |  |  |                                           | 100,000   |  |                       | 4/15/12  |                        |  | 6.0  | %                                       |  |   | 100,000                                          |  |  |                                      | 4,300   |  |                                           |  
|2/15/12               |  |  | 74                                                                                                           |  |  |                                           | 225,000   |  |                       | 2/1/13   |                        |  | 6.0  | %                                       |  |   | 150,000                                          |  |  |                                      | 31,107  |  |                                           |  
|2/29/12               |  |  | 75                                                                                                           |  |  |                                           | 75,000    |  |                       | 2/28/13  |                        |  | 10.0 | %                                       |  |   | 75,000                                           |  |  |                                      | 74,377  |  |                                           |  
|11/15/11              |  |  | 76                                                                                                           |  |  |                                           | 231,750   |  |                       | 5/31/12  |                        |  | 6.0  | %                                       |  |   | 231,750                                          |  |  |                                      | -0-     |  |                                           |  
|1/17/12               |  |  | 77                                                                                                           |  |  |                                           | 100,000   |  |                       | 1/17/13  |                        |  | 12.0 | %                                       |  |   | 100,000                                          |  |  |                                      | 59,466  |  |                                           |  
|                      |  |  |                                                                                                              |  |  |                                           |           |  |                       |          |                        |  |      |                                         |  |   | 8,341,905                                        |  |  |                                      | 924,446 |  |                                           |  



F-24





Note 13 – Convertible Promissory
Notes (continued)



Table 2 (continued)







Related Party:



|Original
        Date |  |  | Note
                                                                                                      # |  |  | Principal or
    
    Value 
    Received |         |  | Maturity
        Date |         | Interest
    
    Rate |  |      | Principal
    
    Balance 
    2/29/12 |  |   | Un-Amortized
    
    Debt Discount 
    2/29/12 |  |  | Carrying
    
    Value 
    2/29/12 |         |  | Interestexpense for the year ended2/29/12 |  
|--------------------- |  |  | ------------------------------------------------------------------------------------------------------------ |  |  | ----------------------------------------- | ------- |  | --------------------- | ------- | ---------------------- |  | ---- | --------------------------------------- |  | - | ------------------------------------------------ |  |  | ------------------------------------ | ------- |  | ----------------------------------------- | -
|4/13/11               |  |  | 16                                                                                                           |  |  |                                           | 70,000  |  |                       | 6/13/11 |                        |  | 0.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|5/23/11               |  |  | 26                                                                                                           |  |  |                                           | 25,000  |  |                       | 5/31/12 |                        |  | 6.0  | %                                       |  |   | 25,000                                           |  |  |                                      | -0-     |  |                                           |  
|5/23/11               |  |  | 27                                                                                                           |  |  |                                           | 70,000  |  |                       | 5/31/12 |                        |  | 6.0  | %                                       |  |   | 70,000                                           |  |  |                                      | -0-     |  |                                           |  
|8/15/11               |  |  | 41                                                                                                           |  |  |                                           | 10,000  |  |                       | 5/31/12 |                        |  | 6.0  | %                                       |  |   | 10,000                                           |  |  |                                      | -0-     |  |                                           |  
|8/15/11               |  |  | 36                                                                                                           |  |  |                                           | 250,000 |  |                       | 5/31/12 |                        |  | 8.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|8/26/11               |  |  | 45                                                                                                           |  |  |                                           | 250,000 |  |                       | 5/31/12 |                        |  | 8.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|10/14/11              |  |  | 49                                                                                                           |  |  |                                           | 200,000 |  |                       | 7/31/12 |                        |  | 8.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|10/4/11               |  |  | 55                                                                                                           |  |  |                                           | 300,000 |  |                       | 7/31/12 |                        |  | 8.0  | %                                       |  |   | -0-                                              |  |  |                                      | -0-     |  |                                           |  
|1/9/12                |  |  | 60                                                                                                           |  |  |                                           | 250,000 |  |                       | 3/31/12 |                        |  | 12.0 | %                                       |  |   | 250,000                                          |  |  |                                      | -0-     |  |                                           |  
|                      |  |  |                                                                                                              |  |  |                                           |         |  |                       |         |                        |  |      |                                         |  |   | 355,000                                          |  |  |                                      | -0-     |  |                                           |  
|                      |  |  |                                                                                                              |  |  |                                           |         |  |                       |         |                        |  |      |                                         |  | $ | 8,696,905                                        |  |  | $                                    | 924,446 |  |                                           | $







Table 2



Non-Related Party:



|           |  |  | Conversion             |        |  | Debt Discount Allocation |  |        |          |  |   | Amortization for |  |  |             |         |  |      
|---------- |  |  | ---------------------- | ------ |  | ------------------------ |  | ------ | -------- |  | - | ---------------- |  |  | ----------- | ------- |  | -----
|Note
    # |  |  | Price
    
    2/29/12 |        |  | Shares
    
    2/29/12  |  |        | Warrants |  |   | BCF              |  |  | Derivatives |         |  | Total
|1          |  |  | $                      | 250.00 |  |                          |  | -0-    |          |  | $ | 19,500           |  |  | $           | 8,000   |  |      
|2          |  |  | $                      | 250.00 |  |                          |  | -0-    |          |  |   | 100,000          |  |  |             | 50,000  |  |      
|3          |  |  | $                      | 200.00 |  |                          |  | -0-    |          |  |   | 55,000           |  |  |             | -0-     |  |      
|4          |  |  | $                      | 1.00   |  |                          |  | 8,912  |          |  |   | -0-              |  |  |             | 41,020  |  |      
|5          |  |  | $                      | 100.00 |  |                          |  | -0-    |          |  |   | 16,500           |  |  |             | 30,000  |  |      
|6          |  |  | $                      | .78    |  |                          |  | 32,051 |          |  |   | 6,250            |  |  |             | 2,500   |  |      
|7          |  |  | $                      | .78    |  |                          |  | 32,051 |          |  |   | 6,250            |  |  |             | 2,500   |  |      
|8          |  |  | $                      | 100.00 |  |                          |  | -0-    |          |  |   | 6,250            |  |  |             | 2,500   |  |      
|9          |  |  | $                      | .48    |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | 85,000  |  |      
|10         |  |  | $                      | 100.00 |  |                          |  | -0-    |          |  |   | 61,000           |  |  |             | 39,000  |  |      
|11         |  |  | $                      | 100.00 |  |                          |  | -0-    |          |  |   | 61,000           |  |  |             | 39,000  |  |      
|12         |  |  | $                      | 100.00 |  |                          |  | -0-    |          |  |   | 15,250           |  |  |             | 9,750   |  |      
|13         |  |  | $                      | .48    |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | 30,607  |  |      
|14         |  |  | $                      | 100.00 |  |                          |  | 1,850  |          |  |   | 175,000          |  |  |             | 225,000 |  |      
|15         |  |  | $                      | 50.00  |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | 61,650  |  |      
|17         |  |  | $                      | .78    |  |                          |  | 50,748 |          |  |   | -0-              |  |  |             | 344,160 |  |      
|18         |  |  | $                      | 50.00  |  |                          |  | 14,880 |          |  |   | -0-              |  |  |             | 150,000 |  |      
|19         |  |  | $                      | .78    |  |                          |  | 50,748 |          |  |   | -0-              |  |  |             | 16,549  |  |      
|20         |  |  | $                      | 50.00  |  |                          |  | 2,000  |          |  |   | -0-              |  |  |             | -0-     |  |      
|21         |  |  | $                      | 50.00  |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | 90,000  |  |      
|22         |  |  | $                      | 50.00  |  |                          |  | -0-    |          |  |   | 38,250           |  |  |             | 135,000 |  |      
|23         |  |  | $                      | 50.00  |  |                          |  | 500    |          |  |   | -0-              |  |  |             | 15,000  |  |      
|24         |  |  | $                      | 50.00  |  |                          |  | 3,000  |          |  |   | -0-              |  |  |             | 90,000  |  |      
|25         |  |  | $                      | .48    |  |                          |  | 50,748 |          |  |   | -0-              |  |  |             | 60,000  |  |      
|28         |  |  | $                      | 50.00  |  |                          |  | -0-    |          |  |   | 8,740            |  |  |             | 37,260  |  |      
|29         |  |  | $                      | .52    |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | 46,875  |  |      
|30         |  |  | $                      | 50.00  |  |                          |  | 1,000  |          |  |   | -0-              |  |  |             | -0-     |  |      
|31         |  |  | $                      | 50.00  |  |                          |  | 1,500  |          |  |   | -0-              |  |  |             | 75,000  |  |      
|32         |  |  | $                      | 50.00  |  |                          |  | 3,000  |          |  |   | -0-              |  |  |             | 145,296 |  |      
|33         |  |  | $                      | .48    |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | -0-     |  |      
|34         |  |  | $                      | 10.00  |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | 80,000  |  |      
|35         |  |  | $                      | .44    |  |                          |  | 40,909 |          |  |   | -0-              |  |  |             | -0-     |  |      
|37         |  |  | $                      | 50.00  |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | -0-     |  |      
|38         |  |  | $                      | 50.00  |  |                          |  | 300    |          |  |   | -0-              |  |  |             | -0-     |  |      
|39         |  |  | $                      | 50.00  |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | -0-     |  |      
|40         |  |  | $                      | 50.00  |  |                          |  | 200    |          |  |   | -0-              |  |  |             | -0-     |  |      
|42         |  |  | $                      | 50.00  |  |                          |  | 500    |          |  |   | -0-              |  |  |             | -0-     |  |      
|43         |  |  | $                      | 50.00  |  |                          |  | 200    |          |  |   | -0-              |  |  |             | -0-     |  |      
|44         |  |  | $                      | 50.00  |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | -0-     |  |      
|46         |  |  | $                      | 50.00  |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | 15,000  |  |      
|47         |  |  | $                      | 50.00  |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | 30,000  |  |      
|48         |  |  | $                      | 5.00   |  |                          |  | -0-    |          |  |   | -0-              |  |  |             | -0-     |  |      
|50         |  |  | $                      | 25.00  |  |                          |  | 1,600  |          |  |   | 8,800            |  |  |             | 31,200  |  |      





F-25











Note 13 – Convertible Promissory Notes (continued)





Table 2 (continued)



Non-Related Party (continued):



|      |  |  | Conversion   |       |  | Debt Discount
    Allocation |  |           |          |  |  |         | Amortization for |  |             |           |  |       |  |          
|----- |  |  | ------------ | ----- |  | ---------------------------- |  | --------- | -------- |  |  | ------- | ---------------- |  | ----------- | --------- |  | ----- |  | ---------
|Note# |  |  | Price2/29/12 |       |  | Shares2/29/12                |  |           | Warrants |  |  | BCF     |                  |  | Derivatives |           |  | Total |  |          
|51    |  |  | $            | 50.00 |  |                              |  | 1,660     |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | -0-      
|52    |  |  | $            | 5.50  |  |                              |  | 15,636    |          |  |  | -0-     |                  |  |             | 250,000   |  |       |  | -0-      
|53    |  |  | $            | .43   |  |                              |  | 14,077    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 100,000  
|54    |  |  | $            | .44   |  |                              |  | -0-       |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 75,000   
|56    |  |  | $            | .43   |  |                              |  | -0-       |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 50,000   
|57    |  |  | $            | .43   |  |                              |  | 101,597   |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 100,840  
|58    |  |  | $            | 5.50  |  |                              |  | 24,545    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | -0-      
|59    |  |  | $            | .78   |  |                              |  | 50,748    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 23,967   
|61    |  |  | $            | .43   |  |                              |  | 50,748    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 45,876   
|62    |  |  | $            | .43   |  |                              |  | 191,538   |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 100,000  
|63    |  |  | $            | .43   |  |                              |  | 138,462   |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 100,000  
|64    |  |  | $            | .60   |  |                              |  | 49,832    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 45,298   
|65    |  |  | $            | 50.00 |  |                              |  | 4,000     |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | -0-      
|66    |  |  | $            | 7.50  |  |                              |  | 13,333    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | -0-      
|67    |  |  | $            | .43   |  |                              |  | 81,312    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 100,000  
|68    |  |  | $            | .45   |  |                              |  | 45,000    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 25,000   
|69    |  |  | $            | .43   |  |                              |  | 50,748    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 26,371   
|70    |  |  | $            | .45   |  |                              |  | 50,748    |          |  |  | -0-     |                  |  |             | 504       |  |       |  | 30,691   
|71    |  |  | $            | .43   |  |                              |  | 176,471   |          |  |  | -0-     |                  |  |             | 5,409     |  |       |  | 69,591   
|72    |  |  | $            | 5.00  |  |                              |  | 2,000     |          |  |  | 2,000   |                  |  |             | -0-       |  |       |  | -0-      
|73    |  |  | $            | .78   |  |                              |  | 50,748    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 8,764    
|74    |  |  | $            | .23   |  |                              |  | 50,748    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 46,661   
|75    |  |  | $            | .43   |  |                              |  | 176,471   |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 74,377   
|76    |  |  | $            | 6.25  |  |                              |  | 37,080    |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | -0-      
|77    |  |  | $            | .43   |  |                              |  | 101,597   |          |  |  | -0-     |                  |  |             | -0-       |  |       |  | 67,378   
|      |  |  |              |       |  |                              |  | 1,775,796 |          |  |  | 579,790 |                  |  |             | 2,243,780 |  |       |  | 3,405,377





F-26









Note 13 – Convertible Promissory Notes (continued)



Related Party:



|                |  |  | Conversion             |        |  | Debt Discount Allocation |  |           |          |  |   |         | Amortization for |  |             |           |  |       |  
|--------------- |  |  | ---------------------- | ------ |  | ------------------------ |  | --------- | -------- |  | - | ------- | ---------------- |  | ----------- | --------- |  | ----- | -
|Note
    
    # |  |  | Price
    
    2/29/12 |        |  | Shares
    
     2/29/12 |  |           | Warrants |  |   | BCF     |                  |  | Derivatives |           |  | Total |  
|16              |  |  | $                      | -0-    |  |                          |  | -0-       |          |  |   | -0-     |                  |  |             | 18,200    |  |       |  
|26              |  |  | $                      | -0-    |  |                          |  | 500       |          |  |   | -0-     |                  |  |             | 25,000    |  |       |  
|27              |  |  | $                      | 100.00 |  |                          |  | 1,400     |          |  |   | -0-     |                  |  |             | 70,000    |  |       |  
|41              |  |  | $                      | 50.00  |  |                          |  | 200       |          |  |   | -0-     |                  |  |             | -0-       |  |       |  
|36              |  |  | $                      | 50.00  |  |                          |  | -0-       |          |  |   | -0-     |                  |  |             | -0-       |  |       |  
|45              |  |  | $                      | 50.00  |  |                          |  | -0-       |          |  |   | -0-     |                  |  |             | 250,000   |  |       |  
|49              |  |  | $                      | 25.00  |  |                          |  | -0-       |          |  |   | -0-     |                  |  |             | 166,667   |  |       |  
|55              |  |  | $                      | 25.00  |  |                          |  | -0-       |          |  |   | -0-     |                  |  |             | 250,000   |  |       |  
|60              |  |  | $                      | 25.00  |  |                          |  | 41,667    |          |  |   | -0-     |                  |  |             | -0-       |  |       |  
|                |  |  |                        |        |  |                          |  | 43,767    |          |  |   | -0-     |                  |  |             | 779,867   |  |       |  
|                |  |  |                        |        |  |                          |  | 1,819,563 |          |  | $ | 579,790 |                  |  | $           | 3,023,647 |  |       | $







F-27









Table 3



Non-Related Party:





|                   |  | Initial Fair |           |  | Value    |   |         |         |  |   | Derivative Liability | 
|------------------ |  | ------------ | --------- |  | -------- | - | ------- | ------- |  | - | -------------------- | 
|Note #             |  | Value        |           |  | Previous |   |         | Current |  |   | Gain (Loss)          | 
|4                  |  | $            | 13,926    |  |          | $ | -0-     |         |  | $ | -0-                  | 
|9                  |  |              | 109,660   |  |          |   | 135,348 |         |  |   | -0-                  | 
|13                 |  |              | 19,393    |  |          |   | -0-     |         |  |   | -0-                  | 
|17                 |  |              | 2,092,878 |  |          |   | -0-     |         |  |   | 8,080                | 
|19                 |  |              | 100,624   |  |          |   | -0-     |         |  |   | 8,080                | 
|25                 |  |              | 60,000    |  |          |   | -0-     |         |  |   | 18,947               | 
|29                 |  |              | 41,677    |  |          |   | -0-     |         |  |   | 18,504               | 
|35                 |  |              | 42,361    |  |          |   | -0-     |         |  |   | 18,430               | 
|53                 |  |              | 100,000   |  |          |   | -0-     |         |  |   | 9,412                | 
|54                 |  |              | 75,000    |  |          |   | -0-     |         |  |   | -0-                  | 
|56                 |  |              | 50,000    |  |          |   | -0-     |         |  |   | -0-                  | 
|57                 |  |              | 100,840   |  |          |   | -0-     |         |  |   | 67,490               | 
|59                 |  |              | 23,967    |  |          |   | -0-     |         |  |   | 10,169               | 
|61                 |  |              | 45,876    |  |          |   | -0-     |         |  |   | 36,659               | 
|62                 |  |              | 100,000   |  |          |   | -0-     |         |  |   | 130,964              | 
|63                 |  |              | 100,000   |  |          |   | -0-     |         |  |   | 97,654               | 
|64                 |  |              | 45,298    |  |          |   | -0-     |         |  |   | 12,707               | 
|67                 |  |              | 100,000   |  |          |   | -0-     |         |  |   | 57,307               | 
|68                 |  |              | 25,000    |  |          |   | -0-     |         |  |   | 32,384               | 
|69                 |  |              | 26,371    |  |          |   | -0-     |         |  |   | 25,238               | 
|70                 |  |              | 30,691    |  |          |   | -0-     |         |  |   | 36,520               | 
|71                 |  |              | 69,591    |  |          |   | -0-     |         |  |   | 131,567              | 
|73                 |  |              | 8,764     |  |          |   | -0-     |         |  |   | 8,080                | 
|74                 |  |              | 46,661    |  |          |   | -0-     |         |  |   | 39,224               | 
|75                 |  |              | 74,377    |  |          |   | -0-     |         |  |   | 74,377               | 
|77                 |  |              | 67,378    |  |          |   | -0-     |         |  |   | 74,408               | 
|                   |  |              | 3,570,333 |  |          |   | 135,348 |         |  |   | 916,201              | 
|Preferred Series A |  |              | 538,328   |  |          |   | 538,328 |         |  |   | 1,338,017            | 
|Totals             |  | $            | 4,108,661 |  |          | $ | 673,676 |         |  | $ | 2,254,218            | 







F-28









Note 13 – Convertible Promissory Notes (continued)







Table 3(a) Black-Scholes option pricing model assumptions
for derivative liabilities



|                   |  |                        |   |  | Expected Volatility                |   |  | Risk-Free Interest Rate             |   |  | Expected Life                     
|------------------ |  | ---------------------- | - |  | ---------------------------------- | - |  | ----------------------------------- | - |  | ----------------------------------
|Note #             |  | Dividend
        Yield |   |  | Initial
        Fair
        Value |   |  | Previous
        Fair
        Value |   |  | Current
        Fair
        Value
|4                  |  | 0.0                    | % |  | 151.71                             | % |  |                                     |   |  |                                   
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|9                  |  | 0.0                    | % |  | 122.61                             | % |  | 125.07                              | % |  |                                   
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|13                 |  | 0.0                    | % |  | 130.92                             | % |  |                                     |   |  |                                   
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|17                 |  | 0.0                    | % |  | 133.43                             | % |  |                                     |   |  | 105.48                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|19                 |  | 0.0                    | % |  | 133.43                             | % |  |                                     |   |  | 105.48                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|25                 |  | 0.0                    | % |  | 141.22                             | % |  |                                     |   |  | 43.70                             
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|29                 |  | 0.0                    | % |  | 147.94                             | % |  |                                     |   |  | 142.19                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|35                 |  | 0.0                    | % |  | 285.90                             | % |  |                                     |   |  | 142.19                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|53                 |  | 0.0                    | % |  | 389.82                             | % |  |                                     |   |  | 266.38                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|54                 |  | 0.0                    | % |  | 378.26                             | % |  |                                     |   |  |                                   
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|56                 |  | 0.0                    | % |  | 389.82                             | % |  |                                     |   |  |                                   
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|57                 |  | 0.0                    | % |  | 247.29                             | % |  |                                     |   |  | 262.25                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|59                 |  | 0.0                    | % |  | 142.81                             | % |  |                                     |   |  | 142.81                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|61                 |  | 0.0                    | % |  | 256.90                             | % |  |                                     |   |  | 270.79                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|62                 |  | 0.0                    | % |  | 257.57                             | % |  |                                     |   |  | 262.89                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|63                 |  | 0.0                    | % |  | 244.07                             | % |  |                                     |   |  | 267.74                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|64                 |  | 0.0                    | % |  | 208.98                             | % |  |                                     |   |  | 0.38                              
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|67                 |  | 0.0                    | % |  | 252.83                             | % |  |                                     |   |  | 267.74                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|68                 |  | 0.0                    | % |  | 258.86                             | % |  |                                     |   |  | 270.79                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|69                 |  | 0.0                    | % |  | 241.75                             | % |  |                                     |   |  | 154.52                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|70                 |  | 0.0                    | % |  | 259.47                             | % |  |                                     |   |  | 270.79                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|71                 |  | 0.0                    | % |  | 255.49                             | % |  |                                     |   |  | 273.81                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|73                 |  | 0.0                    | % |  | 117.06                             | % |  |                                     |   |  | 105.48                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|74                 |  | 0.0                    | % |  | 273.40                             | % |  |                                     |   |  | 272.66                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|75                 |  | 0.0                    | % |  | 274.36                             | % |  |                                     |   |  | 273.81                            
|                   |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|77                 |  | 0.0%                   |   |  | 260.51                             | % |  |                                     |   |  | 272.31                            
|Preferred Series A |  |                        |   |  |                                    |   |  |                                     |   |  |                                   
|                   |  | 0.0                    | % |  | 130.00                             | % |  | 130.00                              | % |  | 293.33                            





F-29











Note 13 – Convertible Promissory Notes (continued)





Convertible promissory note attributable
to related party officer of consolidated subsidiary



During the year ended October 31, 2010,
the Company borrowed $355,500 from its CEO under a convertible promissory note accruing interest at an annual rate of 12%. At
October 31, 2012 and 2011, the balances due under this note were $241,825 and $243,079, respectively. The note was convertible
into the Company’s common stock at $2.00 per share. For year ended October 31, 2012 and 2011, the Company incurred $24,716
and $46,038 of interest expense in connection with this note. Accrued interest included in accrued expenses due under the note
as of October 31, 2012 and 2011 was $113,071 and $91,962, respectively. The accrued interest is also convertible into the Company’s
common stock at $2.00 per share. The entire balance of the note, accrued interest and additional liabilities owed to the former
CEO were converted to Preferred shares of the subsidiary and there is no balance due as of February 28, 2013.



Note 14 – Stockholders’
Deficit



Preferred stock



The aggregate number of shares of Preferred
Stock that the Corporation is authorized to issue up to 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 the
articles of incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of
the shares of any series of Preferred Stock.



Preferred Series A



The Company has authorized 3,000,000 shares,
par value $.01 per share and designated as 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.



Per the terms of the Amended and Restated
Certificate of Designations, subject to the availability of authorized and unissued shares of Series A Preferred Stock, the holders
of Series A Preferred Stock may, by written notice to the Corporation, 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. Additionally, the holders of Series A Preferred Stock, may by written
notice to the Corporation, convert all or part of such holder’s shares (excluding any shares issued pursuant to conversion
of unpaid dividends) into debt obligations of the Corporation, secured by a security interest in all of the Corporation and its’
subsidiaries, at a rate of $0.50 of debt for each share of Series A Preferred Stock. On July 9, 2012, the Company amended the
Certificate of Designations for the Company’s Series A Preferred stock to allow for conversion into Series C Preferred stock.
Furthermore, the amendment allows for conversion at the lowest price the corporation has issued stock as part of a financing to
include all financing such as new debt and equity financing and stock issuances as well as existing debt conversions into stock.



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.



Accounting Standards Codification subtopic
815-40, Derivatives and Hedging; Contracts in Entity’s own Equity (“ASC 815-40”) became effective for us on
March 1, 2010. The Company’s Series A (convertible) Preferred Stock has certain reset provisions that require the Company
to reduce the conversion price of the Series A (convertible) Preferred Stock if we issue equity at a price less than the conversion
price. Upon the effective date, the provisions of ASC 815-40 required a reclassification to liability based on the reset feature
of the agreements if the Company sells equity at a price below the conversion price of the Series A Preferred Stock.



For the year ended February 28, 2013,
the Company, in accordance with ASC 815-40, determined the fair value of the Preferred Series A stock to be $42,881, using the
Black-Scholes formula assuming no dividends, a risk-free interest rate of 0.25%, expected volatility of 438.93%, and expected
life of 2 years (based on the current rate of conversion). At each reporting date, the Company records the changes in the fair
value of the derivative liability as non-operating, non-cash income. The change in fair value of the Preferred Series A derivative
liability resulted in current year non-operating income included in operations of $1,295,136.



During the year ended February 28, 2013,
the Company:



| | · | realized
                                                                                                               a Series A preferred
                                                                                                               stock dividend
                                                                                                               of $3,790
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               75,000 shares of
                                                                                                               Preferred Series
                                                                                                               A stock at $1 per
                                                                                                               share and received
                                                                                                               $75,000 in proceeds.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               481,403 shares
                                                                                                               of Series A preferred
                                                                                                               stock valued at
                                                                                                               $481,403 and induced
                                                                                                               a related party
                                                                                                               shareholder to
                                                                                                               convert $112,247
                                                                                                               of convertible
                                                                                                               promissory notes
                                                                                                               principal and interest,
                                                                                                               $85,000 of shareholder
                                                                                                               loans.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-30









During the year ended February 29, 2012, the Company:



| | · | converted a related-party board member's promissory note
into 1,000,000 shares of Series A Preferred Stock valued at $1,000,000.
| | - | --------------------------------------------------------------------------------------------------------------------------------



| | · | converted 80,000 shares of Series A Preferred Stock plus
accrued but unpaid dividends on arrears on Series A Preferred stock and issued 873 shares of common stock valued at $8,120.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued 226,368 shares of Preferred Series A stock in
lieu of dividend in arrears valued at $113,184 to the Company's CEO.
| | - | -------------------------------------------------------------------------------------------------------------------------







Dividends in arrears on the outstanding Preferred Series A shares were $205,665 and $6,137 as of February
28, 2013 and February 29, 2012, respectively. The Company had 2,366,014 shares issued and outstanding as of February
28, 2013 and 1,809,611 as of February 29, 2012, respectively.



Preferred Series B



The Company has authorized 3,000,000 shares
of Non-Voting Series B 10% Cumulative Convertible Preferred Stock with a par value of $0.00001 per share. Preferred Series B stockholders
may elect to convert all or any part of such holder’s shares with a $5 conversion into Next 1 Interactive, Inc. stock or
a $0.05 conversion into RealBiz Media Group, Inc.



Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary (a “liquidation”), the holders shall be entitled to receive out of
the assets, whether capital or surplus, of the Company an amount equal to 100% of the stated value, plus any accrued and unpaid
dividends thereon and any other fees or liquidated damages owing thereon, for each share of then outstanding Preferred Stock before
any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company shall be insufficient
to pay in full such amounts, then the entire assets to be distributed to the holders shall be ratably distributed among the holders
in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.





F-31







Note 14 – Stockholders’
Deficit (continued)







During the year ended February 28, 2013,
the Company:



| | · | entered
                                                                                                               into stock subscription
                                                                                                               agreements and
                                                                                                               issued 364,600
                                                                                                               shares of Series
                                                                                                               B preferred stock
                                                                                                               at $5 per share
                                                                                                               and 1,630,250 one
                                                                                                               (1) to five (5)
                                                                                                               year common stock
                                                                                                               warrants with an
                                                                                                               exercise price
                                                                                                               of $0.02 to $2.50
                                                                                                               and received $1,692,728
                                                                                                               in proceeds, net
                                                                                                               of $272 of bank
                                                                                                               charges plus $130,000
                                                                                                               received in the
                                                                                                               prior year ended
                                                                                                               February 29, 2012
                                                                                                               with a total value
                                                                                                               of $1,823,000.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | entered
                                                                                                               into Series B preferred
                                                                                                               stock subscription
                                                                                                               agreements and
                                                                                                               issued 51,600 shares
                                                                                                               in exchange for
                                                                                                               services rendered,
                                                                                                               consisting of financing
                                                                                                               and consulting
                                                                                                               fees incurred in
                                                                                                               raising capital,
                                                                                                               valued at $258,000.
                                                                                                               The value of the
                                                                                                               preferred stock
                                                                                                               issued is based
                                                                                                               on the fair value
                                                                                                               of the stock at
                                                                                                               the time of issuance.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dividends in arrears on the outstanding
preferred shares total $125,762 as of February 28, 2013. The Company had 416,200 shares issued and outstanding as of February
28, 2013 and -0- as of February 29, 2012, respectively.



Preferred Series C



The Company has authorized 3,000,000 shares
of Non-Voting Series C 10% Cumulative Convertible Preferred Stock with a par value of $0.00001 per share. Preferred Series C stockholders
may elect to convert all or any part of such holder’s shares with a $5 conversion into Next 1 Interactive, Inc. stock or
a $0.10 conversion into RealBiz Media Group, Inc.



Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary (a “liquidation”), the holders shall be entitled to receive out of
the assets, whether capital or surplus, of the Company an amount equal to 100% of the stated value, plus any accrued and unpaid
dividends thereon and any other fees or liquidated damages owing thereon, for each share of then outstanding Preferred Stock before
any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company shall be insufficient
to pay in full such amounts, then the entire assets to be distributed to the holders shall be ratably distributed among the holders
in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.



During the year ended February 28, 2013,
the Company:



| | · | entered
                                                                                                               into stock subscription
                                                                                                               agreements and
                                                                                                               issued 10,000 shares
                                                                                                               of Series C preferred
                                                                                                               stock at $5 per
                                                                                                               share and received
                                                                                                               $50,000 in proceeds.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | entered
                                                                                                               into Series C preferred
                                                                                                               stock subscription
                                                                                                               agreements and
                                                                                                               issued 26,000 shares
                                                                                                               in exchange for
                                                                                                               services rendered,
                                                                                                               consisting of financing
                                                                                                               and consulting
                                                                                                               fees incurred in
                                                                                                               raising capital,
                                                                                                               valued at $130,000.
                                                                                                               The value of the
                                                                                                               preferred stock
                                                                                                               issued was based
                                                                                                               on the fair value
                                                                                                               of the stock at
                                                                                                               the time of issuance.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dividends in arrears on the outstanding
preferred shares total $6,946 as of February 28, 2013. The Company had 36,000 shares issued and outstanding as of February 28,
2013 and -0- as of February 29, 2012, respectively.



Preferred Series D



The Company has authorized 3,000,000 shares
of Non-Voting Series D 10% Cumulative Convertible Preferred Stock with a par value of $0.00001 per share. Preferred Series D stockholders
may elect to convert all or any part of such holder’s shares with a $5 conversion into Next 1 Interactive, Inc. stock or
a $0.15 conversion into RealBiz Media Group, Inc.



Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary (a “liquidation”), the holders shall be entitled to receive out of
the assets, whether capital or surplus, of the Company an amount equal to 100% of the stated value, plus any accrued and unpaid
dividends thereon and any other fees or liquidated damages owing thereon, for each share of then outstanding Preferred Stock before
any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company shall be insufficient
to pay in full such amounts, then the entire assets to be distributed to the holders shall be ratably distributed among the holders
in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.

F-32





Note 14 – Stockholders’
Deficit (continued)



Preferred Series D (continued)



During the year ended February 28, 2013,
the Company:



| | · | entered
                                                                                                               into stock subscription
                                                                                                               agreements and
                                                                                                               issued 372,700
                                                                                                               shares of Series
                                                                                                               D preferred stock
                                                                                                               at $5 per share
                                                                                                               and 1,980,500 one
                                                                                                               (1) and four (4)
                                                                                                               year common stock
                                                                                                               warrants with an
                                                                                                               exercise prices
                                                                                                               of $0.03 to $0.10
                                                                                                               and received $1,862,656
                                                                                                               in proceeds, net
                                                                                                               of $844 of bank
                                                                                                               charge with a total
                                                                                                               value of $1,863,500.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               158,648 shares
                                                                                                               of Series D preferred
                                                                                                               stock and 103,200
                                                                                                               one (1) to four
                                                                                                               (4) warrants with
                                                                                                               an exercise price
                                                                                                               of $.03 to $25
                                                                                                               in exchange for
                                                                                                               services rendered,
                                                                                                               consisting of financing
                                                                                                               and consulting
                                                                                                               fees incurred in
                                                                                                               raising capital,
                                                                                                               valued at $794,134.
                                                                                                               The value of the
                                                                                                               preferred 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. The
                                                                                                               value of the warrants
                                                                                                               was estimated at
                                                                                                               date of grant using
                                                                                                               Black-Scholes option
                                                                                                               pricing model with
                                                                                                               the following assumptions:
                                                                                                               risk free interest
                                                                                                               rate 0.15% to 0.36,
                                                                                                               dividend yield
                                                                                                               of -0-%, volatility
                                                                                                               factor of 342.90%
                                                                                                               to 346.22% and
                                                                                                               expected life of
                                                                                                               1 to 4 years.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               185,129 shares
                                                                                                               of Series D Preferred
                                                                                                               stock valued at
                                                                                                               $925,647 and induced
                                                                                                               noteholders to
                                                                                                               convert $865,662
                                                                                                               of convertible
                                                                                                               promissory notes
                                                                                                               principal.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               32,000 shares of
                                                                                                               Series D preferred
                                                                                                               stock valued at
                                                                                                               $160,000 for the
                                                                                                               conversion of shareholder
                                                                                                               loans.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               3,600 shares of
                                                                                                               Series D preferred
                                                                                                               stock valued at
                                                                                                               $18,000 for the
                                                                                                               conversion of accounts
                                                                                                               payable.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               380,000 shares
                                                                                                               valued at $1,900,000
                                                                                                               as part of the
                                                                                                               agreement of October
                                                                                                               2, 2012 for the
                                                                                                               purchase of 664.1
                                                                                                               shares of Real
                                                                                                               Biz Holdings, Inc.
                                                                                                               Additionally, the
                                                                                                               Company recorded
                                                                                                               an initial derivative liability
                                                                                                               valued at $35,733
                                                                                                               as the purchase
                                                                                                               agreement includes
                                                                                                               a "ratchet"
                                                                                                               provision. The
                                                                                                               fair value of the
                                                                                                               "ratchet"
                                                                                                               provision was estimated
                                                                                                               at the date of
                                                                                                               grant using the
                                                                                                               Black-Scholes option-pricing
                                                                                                               model with the
                                                                                                               following assumptions:
                                                                                                               risk-free interest
                                                                                                               rate of 0.29%,
                                                                                                               dividend yield
                                                                                                               of -0-%, volatility
                                                                                                               factor of 395.51%
                                                                                                               and expected life
                                                                                                               of 2 years. For the year ended February 28, 2013, the Company, in accordance with ASC 815-4- determine the fair value
of the "ratchet" provision to be $55,719, using the Black-Scholes formula assuming no dividends, a risk-free interest
rate of 0.25%, expected volatility of 390.67% and expected life of 2 years. At each reporting date, the Company records the changes
in fair value of the derivative liability as non-operating, non-cash income. The change in fair value of this "ratchet"
provision derivative liability resulted in a current year non-operating loss included in operations of $19,986.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               stock subscription
                                                                                                               agreements for
                                                                                                               20,000 shares of
                                                                                                               Series D preferred
                                                                                                               stock. In March of 2013, this receivable of $100,000 was paid in full.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dividends in arrears on the outstanding
preferred shares total $257,222 as of February 28, 2013. The Company had 1,132,077 shares issued and outstanding as of February
28, 2013 and -0- as of February 29, 2012, respectively.



Common Stock



On October 28, 2011, our board of directors
and the holders of a majority of the voting power of our shareholders have approved an amendment to our articles of incorporation
to increase our authorized shares of Common Stock from 200,000,000 to 500,000,000. On February 13, 2012, our board of directors
and the holders of a majority of the voting power of our shareholders have approved an amendment to our articles of incorporation
to increase our authorized shares of Common Stock from 500,000,000 to 2,500,000,000. The increase in our authorized shares of
Common Stock became effective upon the filing of the amendment(s) to our articles of incorporation with the Secretary of State
of the State of Nevada.



On May 2, 2012, our board of directors
consented to (i) effect a 500-to-1 reverse split of the Company’s common stock and (ii) reduce the number of authorized
shares from 2,500,000,000 to 5,000,000 and became effective upon the filing of the amendment(s) to our articles of incorporation
with the Secretary of State of the State of Nevada. The consolidated financial statements have been retroactively adjusted to
reflect this reverse stock split.



On June 26, 2012, our board of directors
and the holders of a majority of the voting power of our shareholders have approved an amendment to our articles of incorporation
to increase our authorized shares of Common Stock from 5,000,000 to 500,000,000.



During the year ended February 28, 2013,
the Company:



| | · | issued
                                                                                                               385,734 shares
                                                                                                               of common stock
                                                                                                               and 733,400 one
                                                                                                               (1) to two (2)
                                                                                                               warrants with an
                                                                                                               exercise price
                                                                                                               of $.001 to $1
                                                                                                               in exchange for
                                                                                                               services rendered,
                                                                                                               consisting of financing
                                                                                                               and consulting
                                                                                                               fees incurred in
                                                                                                               raising capital,
                                                                                                               valued at $54,763.
                                                                                                               The value of the
                                                                                                               common stock issued
                                                                                                               was based on the
                                                                                                               fair value of the
                                                                                                               stock at the time
                                                                                                               of issuance. The
                                                                                                               value of the warrants
                                                                                                               was estimated at
                                                                                                               date of grant using
                                                                                                               Black-Scholes option
                                                                                                               pricing model with
                                                                                                               the following assumptions:
                                                                                                               risk free interest
                                                                                                               rate 0.16% to 0.23%,
                                                                                                               dividend yield
                                                                                                               of -0-%, volatility
                                                                                                               factor of 287.30%
                                                                                                               to 396.95 and expected
                                                                                                               life of 1 to 2
                                                                                                               years.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               11,442,205 shares
                                                                                                               of common stock
                                                                                                               valued at $681,792
                                                                                                               to holders of convertible
                                                                                                               promissory notes
                                                                                                               upon the exercise
                                                                                                               of their right
                                                                                                               to convert any
                                                                                                               part of the outstanding
                                                                                                               interest or principal,
                                                                                                               incurring $99,100
                                                                                                               penalties for tardy
                                                                                                               conversions.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-33







Note 14 – Stockholders’
Deficit (continued)





Common Stock (continued)



During the year ended February 29, 2012, the Company:



| | · | On October 28, 2011, our board of directors
and the holders of a majority of the voting power of our shareholders have approved an amendment to our articles of incorporation
to increase our authorized shares of Common Stock from 400,000 to 1,000,000. On February 13, 2012, our board of directors and the
holders of a majority of the voting power of our shareholders have approved an amendment to our articles of incorporation to increase
our authorized shares of Common Stock from 1,000,000 to 5,000,000. The increase in our authorized shares of Common Stock became
effective upon the filing of the amendment(s) to our articles of incorporation with the Secretary of State of the State of Nevada.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Issued 2,500 shares of common stock at
a purchase price of $100 per share, for an aggregate purchase price of $250,000. Additionally, the Company issued to these Investors
three year warrants to purchase 5,000 shares of the Company’s common stock at an exercise price of $125 per share.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued 1,300 shares of common stock at
a purchase price of $50 per share, for an aggregate purchase price of $65,000. Additionally, the Company issued to these Investors
three year warrants to purchase 2,600 shares of the Company’s common stock at an exercise price of $75 per share.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued 900 shares of common stock at a
purchase price of $37.50 per share, for an aggregate purchase price of $33,750. Additionally, the Company issued to these Investors
three year warrants to purchase 1,800 shares of the Company’s common stock at an exercise price of $75 per share.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued 6,000 shares of common stock at
a purchase price of $1 per share, for an aggregate purchase price of $6,000.
| | - | -------------------------------------------------------------------------------------------------------------------



| | · | issued 76,743 shares of common stock and
36,647 warrants in exchange for services rendered, consisting of financing and consulting fees incurred in raising capital, valued
at approximately $1,142,839. The value of the common stock issued was based on the fair value of the stock at the time of issuance.
The value of the warrants was estimated at date of grant using Black-Scholes option pricing model with the following assumptions:
risk free interest rate between 0.10% and 1.45%, dividend yield of -0-%, volatility factor of 132.88% and 445.49% and expected
life of 1 to 5 years.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | entered into warrant exchange agreement
hereby cancelling 4,300 warrants and issuing 3,500 shares of common stock and incurred an additional expense of $220,816. Additionally,
during the year ended February 29, 2012, 233 warrants expired and the Company entered into warrant modification agreements with
various investors and incurred an additional expense of $85,133.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | converted a series of bridge loans and
promissory notes and issued 920,834 shares of the Company's common stock and 26,128 three (3) year warrants to purchase shares
of the Company’s common stock, par value $0.00001 per share, at an exercise price between $25 and $125 per share valued at
$3,467,697.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | in connection with incurring debt instruments,
issued 900 shares of its common stock and 44,750 one (1) to four (year) warrants to purchase shares of the Company's common stock,
with exercise prices between $1 and $250 per share valued at $2,697,250.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | consummated a series of transactions with
a former Board Member. The Company entered into an agreement terminating an original promissory note dated January 25, 2010. In
satisfaction of the $925,000 due on the outstanding promissory note the Company: entered into a one year, six (6%) convertible
promissory note maturing on April 6, 2012 in the amount of $500,000 which can be converted into shares of the Company's common
stock at a per share price of $100 (at the option of the noteholder), plus the Company issued to the noteholder 7,200 two (2) year
warrants, at an exercise prices of $125 per share; the Company issued 4,500 of which 4,250 shares valued at $425,000 were applied
in satisfaction of the remaining principal balance. The remaining 250 shares valued at $25,000 were issued to the former board
member in satisfaction of a remaining balance due from the board member’s daughter's investment in the Company also transacted
in during the year ended February 29, 2012. The former board member also exercised 2,100 warrants into shares of the Company's
common stock in a cashless transaction.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued 120 shares valued at $15,000 to
an employee for services rendered.
| | - | -------------------------------------------------------------------------



| | · | issued 870 shares of common stock in exchange
for settlement of accounts payable valued at $42,791 per a settlement agreement with various service providers. The value of the
common stock issued was based on the fair value of the stock at the time of issuance.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | converted 160 shares of Series A Preferred
Stock plus accrued but unpaid dividends on arrears on Series A Preferred stock, at the request of the holder, into 873 shares of
common stock valued at $8,120.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | re-issued 315 shares of Treasury Stock
as a fee for a consulting agreement at a cost of $25,423.
| | - | ------------------------------------------------------------------------------------------------



F-34







Note 14 – Stockholders’ Deficit (continued)



Common Stock (continued)





| | · | On June 3, 2011, the Company entered into
an Asset Purchase Agreement with Omniverse, a sole proprietorship, New Media Buys, a sole proprietorship, and Jason M. DeMeo, individually
where the Company purchased certain specified assets in exchange for the issuance of 6,000 shares of the Company’s restricted
common stock, par value $0.00001 per share. In addition, the Company entered into an employment agreement with Jason M. DeMeo,
individually, pursuant to which Mr. DeMeo will serve as the Company’s Senior Vice President of Network Operations. On August
30, 2011, the Company terminated the Asset Purchase Agreements and the 6,000 shares of the Company’s restricted common stock
were returned and cancelled.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | · | the
                                                                                                               remaining 2,025
                                                                                                               stock options issued
                                                                                                               on October 3, 2011,
                                                                                                               with an exercise
                                                                                                               price of $7.25
                                                                                                               to employees, directors
                                                                                                               and executives
                                                                                                               vested and the
                                                                                                               Company incurred
                                                                                                               $10,125 in compensation
                                                                                                               costs.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Common Stock Warrants



On June 12, 2012, the Company issued 1,000,000
two (2) year warrants with exercise prices between $0.02 to $0.03 valued at $32,060 and charged to operations. On August 21, 2012,
the Company received $50,000 in proceeds from a related-party investor and issued a bridge loan agreement with no maturity date.
In lieu of interest, the Company issued 100,000 two (2) year warrants with an exercise price of $0.05 per share valued at $1,500
and charged to operations. On January 23, 2013, the Company received $75,000 in proceeds from a related party investor, issued
a 6% promissory note maturing on April 30, 2013, and issued 375,000 one (1) year warrants with an exercise price of $.03 per share
valued at $5,213 and charged to operations. 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 of 0.15% to 0.30%, dividend yield of -0-%, volatility
factor of 329.33% to 384.11% and expected life of 1 to 2 years.



The following table sets forth common share purchase warrants
outstanding as of February 28, 2013:



|                                                |  | Warrants |           |   | Weighted Average Exercise
    Price |  
|----------------------------------------------- |  | -------- | --------- | - | ----------------------------------- | -
|Outstanding, February 28, 2011                  |  |          | 70,299    |   |                                     | $
|Warrants granted                                |  |          | 143,423   |   |                                     | $
|Warrants exercised/forfeited                    |  |          | (33,132   | ) |                                     | $
|Outstanding, February 29, 2012                  |  |          | 180,590   |   |                                     | $
|Warrants granted                                |  |          | 6,373,600 |   |                                     | $
|Warrants exercised/forfeited                    |  |          | (58,412   | ) |                                     | $
|Outstanding, February 28, 2013                  |  |          | 6,495,778 |   |                                     | $
|                                                |  |          |           |   |                                     |  
|Common stock issuable upon exercise of warrants |  |          | 6,495,778 |   |                                     | $





F-35







Note 14 – Stockholders’ Deficit (continued)



Common Stock Warrants (continued)



|                                    |          |  | Common Stock Issuable Upon Exercise ofWarrants Outstanding |  |           | Common Stock IssuableUpon WarrantsExercisable           | 
|----------------------------------- | -------- |  | ---------------------------------------------------------- |  | --------- | ------------------------------------------------------- | 
|Range of Exercise
    Prices Prices |          |  | Number Outstanding at February
    28, 2013                |  |           | Weighted Average Remaining
    Contractual Life (Years) | 
|$                                   | 0.0001   |  |                                                            |  | 125,000   |                                                         | 
|$                                   | 0.02     |  |                                                            |  | 1,500,000 |                                                         | 
|$                                   | 0.03     |  |                                                            |  | 2,639,000 |                                                         | 
|$                                   | 0.05     |  |                                                            |  | 800,000   |                                                         | 
|$                                   | 0.10     |  |                                                            |  | 810,000   |                                                         | 
|$                                   | 0.15     |  |                                                            |  | 3,500     |                                                         | 
|$                                   | 0.20     |  |                                                            |  | 50,000    |                                                         | 
|$                                   | 1.00     |  |                                                            |  | 30,000    |                                                         | 
|$                                   | 2.50     |  |                                                            |  | 431,500   |                                                         | 
|$                                   | 25.00    |  |                                                            |  | 6,247     |                                                         | 
|$                                   | 50.00    |  |                                                            |  | 13,661    |                                                         | 
|$                                   | 75.00    |  |                                                            |  | 4,840     |                                                         | 
|$                                   | 100.00   |  |                                                            |  | 460       |                                                         | 
|$                                   | 125.00   |  |                                                            |  | 47,650    |                                                         | 
|$                                   | 200.00   |  |                                                            |  | 1,000     |                                                         | 
|$                                   | 250.00   |  |                                                            |  | 7,600     |                                                         | 
|$                                   | 375.00   |  |                                                            |  | 1,200     |                                                         | 
|$                                   | 500.00   |  |                                                            |  | 22,276    |                                                         | 
|$                                   | 1,000.00 |  |                                                            |  | 1,844     |                                                         | 
|                                    |          |  |                                                            |  | 6,495,778 |                                                         | 



Common Stock Options



On October 28, 2009, the shareholders
approved the Next 1 Interactive, Inc. 2009 Long-Term Incentive Plan (the “2009 Plan”) at the annual shareholders meeting.
Under the 2009 Plan, 9,000 shares of common stock are reserved for issuance on the effective date of the 2009 Plan. Utilizing
a variety of equity compensation instruments, the Company plans to use the 9,000 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.



On October 3, 2011, the Company authorized
the issuance of 4,050 ten (10) year stock options with an exercise price of $7.25 per share, with 50% vesting immediately and
the remaining 50% vesting in six (6) months. The 4,050 stock options were distributed as follows: 400 each were granted to board
members Pat LaVecchia, Warren Kettlewell and Don Monaco; 800 each were granted to Bill Kerby, CEO and Adam Friedman, CFO; 1,250
was issued to various employees.



The fair value of the options granted
on October 3, 2011 was estimated on the date of grant using the Black-Scholes option-pricing model with the weighted average assumptions
given below:



|Weighted average fair value of options granted |  | $ | 0.10                                                   |  
|---------------------------------------------- |  | - | ------------------------------------------------------ | -
|Expected
    stock price volatility            |  |   | 236.23                                                 | %
|Risk-free interest rate                        |  |   | 1.80                                                   | %
|Expected life of options                       |  |   | 10.0
                                            years |  





F-36









Note 14 – Stockholders’ Deficit (continued)



Common Stock Options (continued)



The Company estimates forfeiture and volatility
using historical information. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon
issues over the equivalent lives of the options. The expected life of the options represents the estimated period of time until
exercise giving consideration to the contractual terms. The Company has not paid dividends on common shares and no assumption
of dividend payment is made in the model.



Compensation expense relating to stock
options granted during the year ended February 28, 2013, was $10,125.



Transactions concerning stock options
pursuant to our stock option plans are summarized as follows:



|                                                                 |  | Shares |       |  | Weighted Average
    Exercise Price |   |      | Aggregate Intrinsic
    Value | 
|---------------------------------------------------------------- |  | ------ | ----- |  | ----------------------------------- | - | ---- | ----------------------------- | 
|Outstanding, February 28, 2011                                   |  |        | -0-   |  |                                     | $ | -0-  |                               | 
|Stock options granted                                            |  |        | 4,050 |  |                                     | $ | 7.25 |                               | 
|Stock options exercised/forfeited                                |  |        | -0-   |  |                                     | $ | -0-  |                               | 
|                                                                 |  |        |       |  |                                     |   |      |                               | 
|Outstanding, February 29, 2012                                   |  |        | 4,050 |  |                                     | $ | 7.25 |                               | 
|Stock options granted                                            |  |        | -0-   |  |                                     | $ | -0-  |                               | 
|Stock options exercised/forfeited                                |  |        | -0-   |  |                                     | $ | -0-  |                               | 
|Outstanding, February 28, 2013                                   |  |        | 4,050 |  |                                     | $ | 7.25 |                               | 
|                                                                 |  |        |       |  |                                     |   |      |                               | 
|Options exercisable at end of period                             |  |        | 4,050 |  |                                     |   |      |                               | 
|                                                                 |  |        |       |  |                                     |   |      |                               | 
|Weighted-average fair value of options granted during the period |  |        |       |  |                                     | $ | 7.25 |                               | 



|                             |      |  | Common Stock Issuable Upon Exercise of Options Outstanding |  |       | Common Stock Issuable Upon
    Options Exercisable      | 
|---------------------------- | ---- |  | ---------------------------------------------------------- |  | ----- | ------------------------------------------------------- | 
|Range of Exercise
    Prices |      |  | Options Outstanding
    at 2/28/13                         |  |       | Weighted Average Remaining
    Contractual Life
(Years) | 
|$                            | 7.25 |  |                                                            |  | 4,050 |                                                         | 





F-37









Note 15 - Commitments and Contingencies



The Company leases approximately 6,500
square feet of office space in Weston, Florida pursuant to a lease agreement, with Bedner Farms, Inc. of the building located
at 2690 Weston Road, Weston, Florida 33331. In accordance with the terms of the lease agreement, the Company is renting the commercial
office space, for a term of five years commencing January 1, 2011 through December 31, 2015. The rent for the year ended February
29, 2013 was $150,072. In September of 2011, the Company sublet a portion of its office space offsetting our rent expense by $1,500
per month. In November 2012, the Company entered another agreement to sublet a portion of its office space offsetting our rent
expense by an additional $2,500 per month. The total monthly rent sublet offset is $4,000.



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



|              |  | Current |         |  | Long-Term |   |         |                   | 
|------------- |  | ------- | ------- |  | --------- | - | ------- | ----------------- | 
|              |  | FY2014  |         |  | FY2015    |   |         | FY2016 and beyond | 
|Carriage Fees |  | $       | -0-     |  |           | $ | -0-     |                   | 
|Consulting    |  |         | 83,090  |  |           |   | 47,090  |                   | 
|Leases        |  |         | 135,233 |  |           |   | 138,475 |                   | 
|Other         |  |         | 167,604 |  |           |   | 167,604 |                   | 
|Totals        |  | $       | 385,927 |  |           | $ | 353,169 |                   | 



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.



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.



The Company was a defendant in a lawsuit
filed by Gari Media Group, Inc. in the United States District court for central district of California alleging that Next 1 owes
$75,000 from a video and music production agreement provided for the Company’s television network.



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 was 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 and has recorded an accrual for $420,000 in
other current liabilities at February 28, 2013.



F-38







Note 16 – Segment Reporting



Accounting Standards Codification 280-16
“Segment Reporting”, established standards for reporting information about operating segments in annual consolidated
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, 2013 and February 29, 2012:



|                   |  | 2013 |            |   | 2012 |  
|------------------ |  | ---- | ---------- | - | ---- | -
|Revenues:          |  |      |            |   |      |  
|Media              |  | $    | 436,748    |   |      | $
|Travel             |  |      | 550,367    |   |      |  
|Segment revenues   |  | $    | 987,115    |   |      | $
|                   |  |      |            |   |      |  
|Operating expense: |  |      |            |   |      |  
|Media              |  | $    | 2,276,093  |   |      | $
|Travel             |  |      | 2,868,784  |   |      |  
|Segment expense    |  | $    | 5,144,877  |   |      | $
|                   |  |      |            |   |      |  
|Net income (loss): |  |      |            |   |      |  
|Media              |  | $    | (1,839,344 | ) |      | $
|Travel             |  |      | (2,318,417 | ) |      |  
|Segment net loss   |  | $    | (4,157,761 | ) |      | $
|                   |  |      |            |   |      |  
|Segment assets:    |  |      |            |   |      |  
|Media              |  | $    | 4,579,372  |   |      | $
|Travel             |  |      | 10,406     |   |      |  
|Segment total      |  |      | 4,479,778  |   |      |  
|Corporate          |  |      | 110,000    |   |      |  
|Segment total      |  | $    | 4,589,778  |   |      | $



The Company did not generate any revenue
outside the United States for the years ended February 28, 2013 and February 29, 2012, and the Company did not have any assets
located outside the United States.



Note 17 – Fair Value Measurements



The Company has adopted new guidance under
ASC Topic 820, effective January 1, 2009. New authoritative accounting guidance (ASC Topic 820-10-15) under ASC Topic 820, Fair
Value Measurements and Disclosures, delayed the effective date of ASC Topic 820-10 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until
2009.



ASC Topic 820 establishes a fair value
hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data and requires
disclosures for assets and liabilities measured at fair value based on their level in the hierarchy. Further new authoritative
accounting guidance (ASU No. 2009-05) under ASC Topic 820, provides clarification that in circumstances in which a quoted price
in an active market for the identical liabilities is not available, a reporting entity is required to measure fair value using
one or more of the techniques provided for in this update.



F-39







Note 17 – Fair Value Measurements (continued)



The standard describes a fair value hierarchy
based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used
to measure fair value which are the following:



| | · | Level 1 - Quoted prices in active markets for
    identical assets or liabilities.
| | - | ----------------------------------------------------------------------------------



| | · | Level 2 - Inputs other
    than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;
    quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market
    data for substantially the full term of the assets or liabilities.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Level 3 - Unobservable
    inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



Our assessment of the significance of a particular input to
the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.



The Company analyzes all financial instruments
with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity” and ASC
815,“Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each period end, with
any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives.
The effects of interactions between embedded derivatives are calculated and accounted for in arriving at the overall fair value
of the financial instruments. In addition, the fair values of freestanding derivative instruments such as warrant and option derivatives
are valued using the Black-Scholes model.



The Company uses Level 3 inputs for its
valuation methodology for the warrant derivative liabilities and embedded conversion option liabilities as their fair values were
determined by using the Black-Scholes option pricing model based on various assumptions. The Company’s derivative liabilities
are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results
of operations as adjustments to fair value of derivatives.



The following table sets forth the liabilities
as February 28, 2013, which are recorded on the balance sheet at fair value on a recurring basis by level within the fair value
hierarchy. As required, these are classified based on the lowest level of input that is significant to the fair value measurement:



|                                                                                        |  |         |         |  | Fair Value Measurements at Reporting Date Using                    |  
|--------------------------------------------------------------------------------------- |  | ------- | ------- |  | ------------------------------------------------------------------ | -
|Description                                                                             |  | 2/28/13 |         |  | Quoted Prices in
    Active Markets for Identical Assets (Level 1) |  
|                                                                                        |  |         |         |  |                                                                    |  
|Series A and D convertible redeemable preferred stock
    with     reset     provisions |  | $       | 98,600  |  |                                                                    | $
|Convertible promissory note with embedded conversion
    option                         |  |         | 304,987 |  |                                                                    |  
|Total                                                                                   |  | $       | 403,587 |  |                                                                    | $



The following table sets forth a summary of changes in fair
value of our derivative liabilities for the year ended February 28, 2013 and February 29, 2012:



|                                                                                                             |  | 2/28/13 |            |   | 2/29/12 |  
|------------------------------------------------------------------------------------------------------------ |  | ------- | ---------- | - | ------- | -
|Beginning balance                                                                                            |  | $       | 2,254,219  |   |         | $
|Fair value of embedded conversion feature of Preferred Series securities
    at issue date                   |  |         | 35,733     |   |         |  
|Fair value of embedded conversion feature of convertible promissory
    notes at issue date                  |  |         | 194,664    |   |         |  
|Change in fair value of embedded conversion feature of Preferred
    Series securities included in earnings  |  |         | (1,275,150 | ) |         |  
|Change in fair value of embedded conversion
    feature of convertible promissory notes included in earnings |  |         | (805,879   | ) |         |  
|Ending balance                                                                                               |  | $       | 403,587    |   |         | $





F-40







Note 18 – Income Taxes



Next 1 Interactive Inc. follows the guidance
of ASC 740, “Income Taxes.” Deferred income taxes reflect the net effect of (a) temporary difference between carrying
amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating
loss carry-forwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because
no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carry-forward
has been recognized, as it is not deemed likely to be realized.



The provision for income taxes consists
of the following components for the years ended February 28, 2013 and February 29, 2012 are as follows:



|         |  |   | 2013 |  |  |   | 2012 | 
|-------- |  | - | ---- |  |  | - | ---- | 
|Current  |  | $ | -    |  |  | $ | -    | 
|Deferred |  |   | -    |  |  |   | -    | 
|         |  | $ | -    |  |  | $ | -    | 



The components of deferred income tax
assets and liabilities for the years ended February 28, 2013 and February 29, 2012 are as follows:



|                                           |  | 2013 |             |   | 2012 |  
|------------------------------------------ |  | ---- | ----------- | - | ---- | -
|Net operating loss carry-forwards          |  | $    | 17,572,000  |   |      | $
|Equity based compensation                  |  |      | 3,277,000   |   |      |  
|Amortization and impairment of intangibles |  |      | 4,488,000   |   |      |  
|Valuation allowance                        |  |      | (25,337,000 | ) |      |  
|                                           |  | $    | -           |   |      | $



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.



The effective tax rates for years ended
February 28, 2013 and February 29, 2012 were computed by applying the federal and state statutory corporate tax rates as follows:



|                                  |  | 2013 |     |   | 2012 | 
|--------------------------------- |  | ---- | --- | - | ---- | 
|Statutory Federal income tax rate |  |      | -35 | % |      | 
|State taxes, net of Federal       |  |      | -4  | % |      | 
|Permanent difference              |  |      | 1   | % |      | 
|Increase in valuation allowance   |  |      | 40  | % |      | 
|                                  |  |      | 0   | % |      | 



The valuation allowance has increased
by $1,683,000 in 2013 and $6,348,000 in 2012.



The net operating loss (“NOL”)
carry-forward balance as of February 28, 2013 is approximately $46 million expiring between 2025 and 2032. 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 utilization of the NOL’s may be limited by
Internal Revenue Code Section 382 which restricts annual utilization following a greater than 50% change in ownership.



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 2007 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 consolidated
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.



F-41







Note 19 – 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 after February 28, 2013,
and has determined that all events requiring disclosure were made.



During March through May of 2013, the
Company:



| | · | converted
                                                                                                               8,250 shares of
                                                                                                               Series B Preferred
                                                                                                               stock valued at
                                                                                                               $41,250 into 825,000
                                                                                                               shares of RealBiz
                                                                                                               Media Group, Inc.
                                                                                                               stock a subsidiary
                                                                                                               of Next 1 Interactive,
                                                                                                               Inc.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | converted
                                                                                                               22,000 shares of
                                                                                                               Series D Preferred
                                                                                                               stock valued at
                                                                                                               $110,000 into 866,633
                                                                                                               shares of RealBiz
                                                                                                               Media Group, Inc.
                                                                                                               stock a subsidiary
                                                                                                               of Next 1 Interactive,
                                                                                                               Inc.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | collected
                                                                                                               $100,000 in proceeds
                                                                                                               for Series D stock
                                                                                                               subscriptions and
                                                                                                               issued 20,000 shares
                                                                                                               and 200,000 one
                                                                                                               (1) year warrants
                                                                                                               with an exercise
                                                                                                               price of $0.03.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | received
                                                                                                               $985,835 in proceeds,
                                                                                                               net of $165 of
                                                                                                               bank charges, and
                                                                                                               issued 197,200
                                                                                                               shares of Series
                                                                                                               D Preferred Stock
                                                                                                               and 1,833,500 one
                                                                                                               (1) year warrants
                                                                                                               with an exercise
                                                                                                               price of $0.03
                                                                                                               to $0.10 valued
                                                                                                               at $986,000.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               47,750 shares of
                                                                                                               Series D Preferred
                                                                                                               stock valued at
                                                                                                               $238,750 to employees
                                                                                                               for services rendered.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | 125,000
                                                                                                               warrants were exercised
                                                                                                               and the Company
                                                                                                               issued 125,000
                                                                                                               shares of its common
                                                                                                               stock.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               1,700 shares of
                                                                                                               Series D Preferred
                                                                                                               stock and 50,000
                                                                                                               one (1) year warrants
                                                                                                               with an exercise
                                                                                                               price of $0.03
                                                                                                               in exchange for
                                                                                                               services rendered
                                                                                                               valued at $9,187.
                                                                                                               The Company based
                                                                                                               the fair value
                                                                                                               of the Series D
                                                                                                               Preferred stock
                                                                                                               at the time of
                                                                                                               issuance or the
                                                                                                               fair value of the
                                                                                                               services provided,
                                                                                                               whichever was more
                                                                                                               readily determinable.
                                                                                                               The value of the
                                                                                                               warrants was estimated
                                                                                                               at date of grant
                                                                                                               using Black-Scholes
                                                                                                               option pricing
                                                                                                               model with the
                                                                                                               following assumptions:
                                                                                                               risk free interest
                                                                                                               rate 0.16% , dividend
                                                                                                               yield of -0-%,
                                                                                                               volatility factor
                                                                                                               of 344.89% and
                                                                                                               expected life of
                                                                                                               1 year.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | · | issued
                                                                                                               20,000 one (1)
                                                                                                               year warrants with
                                                                                                               an exercise price
                                                                                                               of $0.10 in exchange
                                                                                                               for services rendered
                                                                                                               valued at $201.
                                                                                                               The value of the
                                                                                                               warrants was estimated
                                                                                                               at date of grant
                                                                                                               using Black-Scholes
                                                                                                               option pricing
                                                                                                               model with the
                                                                                                               following assumptions:
                                                                                                               risk free interest
                                                                                                               rate 0.14% , dividend
                                                                                                               yield of -0-%,
                                                                                                               volatility factor
                                                                                                               of 338.98% and
                                                                                                               expected life of
                                                                                                               1 year.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | converted
                                                                                                                                 $14,050
                                                                                                                                 of
                                                                                                                                 principal
                                                                                                                                 and
                                                                                                                                 interest
                                                                                                                                 from
                                                                                                                                 convertible
                                                                                                                                 promissory
                                                                                                                                 notes
                                                                                                                                 into
                                                                                                                                 27,500
                                                                                                                                 shares
                                                                                                                                 of
                                                                                                                                 RealBiz
                                                                                                                                 Media
                                                                                                                                 Group,
                                                                                                                                 Inc.,
                                                                                                                                 a
                                                                                                                                 subsidiary
                                                                                                                                 of
                                                                                                                                 the
                                                                                                                                 Company.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | converted
                                                                                                                                 150,000
                                                                                                                                 shares
                                                                                                                                 of
                                                                                                                                 Series
                                                                                                                                 A
                                                                                                                                 Preferred
                                                                                                                                 stock,
                                                                                                                                 upon
                                                                                                                                 investor
                                                                                                                                 request,
                                                                                                                                 issuing
                                                                                                                                 30,000
                                                                                                                                 shares
                                                                                                                                 of
                                                                                                                                 Series
                                                                                                                                 C
                                                                                                                                 Preferred
                                                                                                                                 stock
                                                                                                                                 simultaneously converting the 30,000 shares of Series C Preferred stock into 1,500,000 shares of RealBiz
Media Group, Inc. common stock totaling
                                                                                                                                 $150,000.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issued
                                                                                                               7,600 shares of
                                                                                                               Series B Preferred
                                                                                                               stock in exchange
                                                                                                               for services rendered
                                                                                                               valued at $38,000.
                                                                                                               The value of the
                                                                                                               Series B Preferred
                                                                                                               stock 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.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | a
                                                                                                               convertible promissory
                                                                                                               note holder executed
                                                                                                               a partial principal
                                                                                                               conversion in the
                                                                                                               amount of $6,335
                                                                                                               into 618,000 shares
                                                                                                               of common stock
                                                                                                               at $0.01025 per
                                                                                                               share.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-42