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NEXCF: NexTech Reports Preliminary Q4 Revenues for Calendar Year 2019...

Byline: Zacks Small Cap Research

By Lisa Thompson



NexTech (OTC: NEXCF) released its revenue and gross margin numbers for calendar year Q4 2019. It has just moved to a calendar year and has not yet reported a quarter this way so our model is still using the fiscal year. For Q4 2019 NexTech says it had revenues of $2.58 million and gross margin of $1.34 million or 51.9% right on target with gross margin expectations. This is higher than the $2.38 million we had expected for the quarter ending Feb 28, 2020 and the same gross margin percent we expected. For the Christmas month of December, the company had revenues of $760,000 and gross margin of $453,000 (or 59.6%.) This compares with $700,000 for the month of November with gross profit of $300,000 (or 42.9%.)

It looks like the company reached approximately $6.5 million for calendar year 2019 ($5.0 million US) on target with guidance. Its goal is US$15 million (or $19.5 million Canadian) for revenues in calendar 2020. The gross margin target for 2020 is still between 60-70%.

When the company reports Q4 2019, we will update our model to match the calendar year with what information we are provided.

...Since our last report...

On November 19, 2019 NexTech announced it partnered with LivePerson , to integrate augmented reality (AR) for enhanced product views and 3D advertising into LivePerson's platform.

On November 22, NexTech closed on a non-brokered private placement of four million units priced at $0.75 per unit for gross proceeds of $3 million . Each unit comprised one common share and one share purchase warrant exercisable at $0.93 per share for a period of two years from issuance, subject to acceleration. All securities issued were subject to a four-month hold period from the date of issuance, expiring on March 23, 2020. Only existing investors and shareholders invested in this round. We believe the company now has over $2.0 million in cash on the balance sheet.

On November 28, 2019 NexTech AR Solutions announced that its 3D augmented reality (3D/AR) solution for eCommerce now integrates seamlessly with Magento 2.0 . 250,000 eCommerce sites use Magento.

On December 11th, 2019 it announced plans to launch a stand-alone dual platform app in early Q1 2020 and we believe that is still on track. The app will employ the freemium business model whereby a user gets one free 3-D scan, but is billed for additional scan "packs" as well as charged a monthly subscription fee for hosting the 3-D asset.

On Dec. 20, 2019 NexTech AR Solutions announced that NexTech's 3D augmented reality (3D/AR) solution now integrates seamlessly with Facebook Messenger. It will work on desktop computers and mobile phones and is device agnostic.

...Still on Track for the Launch of the Ad Network

On October 24th, 2019 NexTech announced that it expects to launch a 3D-AR-360 ad network in Q1 2020. All of its customers have expressed interest in running 3D ads and NexTech is working with Google and others to help facilitate this. NexTech believes it is the only company that will have an end-to-end solution--from creating the 3D assets, hosting them, and then serving up the ads. The company has found AR ads deliver consistently better click through rates than flat 2D ads, and works especially well on mobile phones. The click through rate for immersive ads has been 200-300% higher than the click through rate for standard 2D ads.

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Author:Zacks Small Cap Research
Article Type:Financial report
Date:Jan 7, 2020
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