NexTech AR (OTC:NEXCF) is a small, B2B startup based in Toronto that was formed to provide services for, and invest in, businesses using Augmented Reality (AR) and hologram technologies. These technologies are used to improve sales and profits for eCommerce sites, and other verticals such as entertainment. This technology converts two-dimensional images of real objects and people into three dimensions using scanners and software. Using AR is a proven way to boost sales and reduce returns in eCommerce, and provides an engaging, economic way to provide information in the education and training space.
‣ Augmented Reality (AR) is just beginning to make its way into mainstream use and the market is exploding. NexTech AR is the only public pure play we know of that is providing services to allow companies to use AR in marketing and advertising their goods. At a price to vendors of $30 per month per SKU, adoption of just a tiny percent of the trillions of products sold worldwide will create a massive revenue stream for NexTech AR.
‣ AR technology is starting to be introduced to online advertising. Instagram just added four vendors who have pioneered the space with try-on features and is working to add AR marketing and advertising to its platform. Google and Unity are both active in working on adding AR capability to their advertising platforms, and NexTech AR is working with both of them to make it easy for customers to create and place AR ads with them. This market is starting from virtually zero today and should be huge if even a small percentage of companies use AR to sell or advertise their products. Just as video ads grew and are sold at much higher prices that display ads, we expected AR ads to be even more expensive opportunity for ad networks.
‣ The company is currently has two sources of revenue:
◦ A SaaS offering to businesses that place AR renderings created by NexTech AR, or by the customer themselves, for use on their shopping websites and mobile apps, or in ad campaigns. ECommerce customers are charged a monthly fee based on the number of SKUs. Current customers include IBM, Budweiser, Zoltan David, Block Scientific, Walther Arms, Wright Brothers, Vertical Designs, Touchstone Home Products, and BRNT Designs.
◦ The sale of products via the web or mobile app enhanced by the use of AR and holograms in its marketing. This business currently generates most of the revenues for the company. NexTech is acquiring eCommerce businesses that have standard web sites and then adding AR and/or holograms to boost sales and profitability. This year NexTech purchased two small companies, selling unrelated products, but with positive cash flow and it has already started to improve them. We expect it to continue to buy web sites at low valuations when available. While these company-owned web sites are primarily being used for in house testing, we could see the company growing them and ultimately reselling them later at higher valuations.
‣ The company is uniquely positioned versus its competition. Its platform works with both Apple and Android, while others work only on IOS. It can push 3D content to both the web, and an app, while others cannot do both. It allows customers to self publish which others do not. It provides a full range of services—from image capture to hosting, and it has expertise in holograms and training allowing it to add more than just basic 3D AR capabilities.
‣ It has just launched its education and training platform that can not only be integrated into eCommerce sites to teach customers about products, but can be used for traditional teaching, training and even entertainment. We expect it to go live with current customer companies like Walther Arms, who will use it to compile complete information about its products, along with training and talks by product evangelists.
‣ With a nascent market projected to increase by 289% per year over the next five years, NexTech as a unique public pure play deserves a higher valuation. It currently trades at 2.5xs projected 2020 calendar sales of US$12 million.
Source: NexTech AR
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