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Subject:  Re: NexTech AR (NEXCF) Date:  7/16/2020  10:15 AM
Author:  Cdnguy5858 Number:  69629 of 71865

This company has been talked about a bit on the Motley Fool Stock Advisor CANADA board. It is not a recommendation, so I can post freely what I came up with when I took my deep dive. Short of it there are some VERY questionable transactions. This is a hard pass, and OT for this wonderful board (my first post here - I am bit afraid to do this lol).

NextTech AR

So I looked this company up as it has popped the last week or so, and combined with the press release mentioning Fastly, I was curious. It has also been mentioned on these forums in the past. I perused their website, and read their latest reports, retrieved from SEDAR, and then googled them.

After looking at their website, I thought that the technology looked kind of cool. Maybe someone like wayfair would be interested. Basically you can see what a specific item might look like in your room. Or clothes, as mentioned in an interview on Yahoo Finance. Though I didn’t think The CEO came off well in this interview, I thought the idea seemed intriguing. He mostly talked about getting proper fit for clothes by having a picture of you, your actual size, and being able to put clothes on. I guess like an avatar in a game.

The reports, they had 2 year end reports, May 19 and Dec 19. YR end rev for may 19 was $2m, by Dec 19 had $4m, gross profit was 976k & 2.4m respectively. Decent gross margins of 48.8% & 60%, always nice to see this grow, particularly with Rev growth as well. They also went on something of a purchasing spree, and bought the following companies:

Infinite Pet life for 1.6m, which sells health supplements for pets
Hootview for a very small amount, they have something to do with Cameras
Vacuum cleaner market, an e-commerce website that sells vacuum supplies for 1.m as well, in the form of 2m shares

So now I am thinking, what the heck? Why did they buy those companies? They seemed completely unrelated.

I kept reading the reports, and they mentioned a $2.2M impairment charge. In the notes it was revealed that this was from Future Farm (cannabis company) & EdCetera, which they had purchased in march 18 & dec18 respectively. This impairment was recognized in dec19. Some of this impairment was due to “apps”, with no further explanation.

So I was thoroughly confused at this point, and googled the company and the CEO, Evan Gappalberg. Found that Mr. Gappalberg had some involvement with taking Take Two Interactive, but I couldn’t immediately find with what company he did that with. It was at this point that I came across short reportfrom Hindenburg research. It is VERY damning in my opinion. If you are thinking of investing in NextTechAR I highly recommend reading that report, however the coles notes are:

NextechAR pays for promotion, a lot of it. A press release every 2 days.
The companies purchased by NextechAR were actually owned by the CEO & COO of Nextech previously. Basically all of them. This includes the impairment charge of “apps” as well, they were from Mr. Gappalberg himself, and were essentially worthless, but he got paid a lot of money for them.

All in all, this company sounds really bad to me, and I would run not walk away from it. My $0.02. I hope it is ok to reply to this as I know its OT.
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