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NexTech AR Solutions seeing rapid growth as augmented reality goes mainstream

First mover advantage in the explosive augmented reality (AR) space with its ARitize technology Currently pursuing four multibillion-dollar verticals in the industry Augmented Reality Experiences; Augmented Reality eCommerce & Advertising; Hybrid and Virtual Events; and Augmented Learning  What NexTech AR does: NexTech AR Solutions Inc (CSE:NTAR) (OTCMKTS:NEXCF) is creating a major buzz in the augmented reality (AR) space with its proprietary ecommerce platform, ARitize. ARitize is the first cross-platform, browser-based and web-enabled augmented reality ecommerce option. A monthly SaaS (Software as a Service) subscription platform, ARitize enables retailers to transform two-dimensional images into true 3D AR experiences. AR and virtual reality (VR) applications are set to revolutionize the eCommerce space, a burgeoning US$2.8 billion industry that is expected to nearly double its value in three years, according to 2020 company data. The Toronto-based company is currently pursuing four potentially multi-billion dollar verticals in the AR industry in areas where it sees incredible revenue potential – Augmented Reality Experiences; Augmented Reality eCommerce & Advertising; Hybrid and Virtual Events; and Augmented Learning  The company launched webAR for e-commerce early in 2019 and has been rapidly signing up customers onto its SaaS platform, with notable customer wins like Walther Arms, Wright Brothers, Mr Steak and Budweiser. The technology allows companies to create 3D versions of their products and create 360-degree ads for Facebook and Google. ARitize University is an app-based solution that allows companies and educational establishments to leverage all of their existing 2D assets such as YouTube videos, PDF documents, PowerPoint decks and images, and overlay immersive 3D-AR experiences on top of that content for an interactive training experience that drives productivity. AR Hollywood Studios is a proprietary entertainment venue for which it is producing immersive content using AR as the primary display platform. For brick and mortar stores, NexTech is also involved in what it calls v-commerce, which the company believes could transform the $3.7 trillion retail sector. The technology can create a virtual store in which customers can “try on” and buy products virtually in 3D. Its VRitize platform will include an app for both iOS and Android, which will work on VR headsets. This would allow any store with a pair of VR goggles to create a virtual store for its customers. Additionally, NexTech’s Capture AR 3D app will allow users to create their own 3D images in less than two hours with just a smartphone and without requiring any technical knowledge, making AR dramatically more mainstream.  How is it doing: NexTech AR Solutions has continued to successfully roll out its AR and VR for e-commerce, education, conferences and events during the first quarter of 2021 and has expanded its offerings. On January 20, the company announced that Microsoft’s Azure Cloud Services platform will be a standard offering across its virtual experience platforms and consumer apps enabling hyper-scalable, secure, and immersive events and applications for users. On January 25, NextTech also said it reached a deal to become a preferred channel partner of Strategic Site Selection, a firm that secures venues and hotels for its industry and association clients’ meetings and events. As an SSS preferred channel partner, NexTech will work directly with clients to create events that bridge the physical and the virtual, while also providing a safe, inclusive and convenient setting for global attendees.  Among contract news, on January 15, NexTech reported that it had signed a renewal agreement with Polycom valued at $470,000 initially for a six-month term.  The company noted, however, that there is potential for additional revenue after the six months.  And a day later the company announced the signing of a six-figure contract to supply its InfernoAR video conferencing and virtual events platform (VXP) to the National Association of Medicaid Directors (NAMD). In March NexTech revealed that it had joined the Interactive Advertising Bureau (IAB) AR board, a trade association with more than 650 member media companies, brands and technology firms responsible for selling, delivering and optimizing digital ad marketing campaigns. Back in February, NexTech beefed up its sales team with two top-tier executives, hiring Zak Mcleod, formerly of Fastly Inc, as senior director of sales EMEA as well as Rory Ganness, formerly of Salesforce.com Inc, as director of enterprise sales North America. The company said both hires would establish it as a market-leading partner for all-things augmented reality (AR) across the globe. This includes introducing Nextech’s platform and tools to high-value markets such as higher education, e-commerce, virtual events, financial services, and healthcare through large client acquisitions across these verticals. Over the previous six months, Nextech noted that it had actively sought out leading technology industry experts who can elevate the company’s mission, provide value, and drive revenue across all verticals, attracting top-tier talent from SAP, Apple, Microsoft and The Walt Disney Company, among others. Notably, at the start of January, NextTech revealed the hiring of former Microsoft Online Inc president Hareesh Achi to be president of its advertising network. On the financial front, the company in mid-April announced full-year results, including significant revenue and profit increases.  Revenue for the 12 months ended December 31, 2020, was $17.7 million, which represents an increase of 342% compared to the seven months ended December 31, 2019. The company reorganized its fiscal year to match the calendar year in May of 2019, hence the shorter period.  Gross profit for the year was $9.9 million, more than quadruple the $2.3 million in profit from the seven months ended December 31, 2019. Working capital at the end of 2020 was $13.6 million.  NexTech officially launched its 3D/AR advertising network on March 2. The company noted then that the network generated very positive results at recent virtual and hybrid events for Repticon, which puts on 100 events annually, and the North Carolina Association of Zoning Officials (NCAZO) Annual Conference. In other innovations, at the end of February, NexTech launched version 2.0 of AiR Show, an app that can turn musical artists into holograms that users can interact with in an augmented reality experience, which included two major feature additions, with the integration of QR code scanning and in-app purchasing capabilities. When scanned, the QR code takes a user directly to an experience within AiR Show and can be shared via email, social networks or printed. Additionally, in-app purchasing capabilities will allow users to purchase premium content.  The company said it has also had success in testing and is pursuing additional technological advancements within AiR Show including live streaming of human holograms. And earlier in the same month, NexTech also announced a major new upgrade to its virtual experience platform with the launch of new standardized chat features within its virtual experience platform and ARoom collaborative streaming solution. The company said it will also offer the chat platform as a standalone SaaS service externally, opening up another potential revenue stream.  On the financing front, on April 8, NexTech announced the closing of an upsized $14 million bought-deal short-form prospectus that it plans to use for working capital and other purposes. The company issued 2.8 million units (each containing one share and one half of a share purchase warrant) at a price of $5 per unit. NexTech issued an additional 100,000 common share purchase warrants as partial exercise of an over-allotment option, which brought gross proceeds to roughly $14 million. The company said the net proceeds from the offering would be used for working capital and general corporate purposes. Meanwhile, in January, NexTech revealed that it had sold its entire holdings of around 130.187 Bitcoins, realizing a profit of about $200,000. The company had only announced at the end of December 2020 that it planned to make an initial investment of $2million in Bitcoin, saying that as the widespread adoption of Bitcoin continues, the timing was right for such a move. And in the same month, NexTech said its CEO Evan Gappelberg had purchased a total of 250,000 company shares, which included open market purchases and the exercising of warrants. The company noted that Gappelberg’s purchases comprised of $157,000 from the exercise of warrants, as well as $125,000 worth of company stock purchased in the open market at C$5.08 per share, bringing his 12-month total cash investment in the company to $1,258,421.  Inflection points: Further signings to use AR and VR solutions for e-commerce, education, conferences, and events More news on the growth of NexTech’s 3D/AR ad network Further technology upgrades for virtual experience platform and ARoom live streaming platforms What the broker says: Starwood Research has called NexTech a potential “unicorn farm” and in April 2020 tagged the firm with a $20 price target.  “We believe NEXCF is under-valued based on it’s strong growth fundamentals,” Starwood said. “The stock is now even better positioned for a potential upside to $20 — as the company’s AR business is perfectly aligned with the new coronavirus theme of remote working/AR-powered ‘try it on’ e-commerce, and training.” Starwood was also impressed with NexTech’s ARitize 3D AR 360 ad network, calling it a potential game-changer for the $200 billion online ad industry.  “The big idea here is that NEXCF’s AR and VR applications for commerce and online advertising are a potential game-changer for these massive markets — because they help e-commerce businesses achieve the ‘holy grail’: increasing sales while reducing product returns,” Starwood added. What the boss says: Following January’s news of his further investment in the company, NexTechCEO Evan Gappelberg commented: “When I look at our diversified business, I see a huge opportunity in the multiple markets that we operate in. The TAM or total available market just for the virtual events industry is $90 billion on its way to $400 billion, according to Grandview. We are just scratching the surface of this industry leaving many years of forward growth still on the table.” He added: “When I think of our AR business, eCommerce business or our 3D ad network, I again see many years of forward growth ahead of us which is why I am investing so heavily in NEXCF. I strongly feel that we are undervalued compared to the huge multi-billion-dollar market opportunity and compared to other technology companies which is why I will continue to buy shares in my company.” Contact the author: patrick@proactiveinvestors.com Follow him on Twitter @PatrickMGraham