Financial News
Nextech AR Solutions Corp. Reports Record Q3 Sequential Growth As 3D Modeling Revenue Surges +192% and Gross Profit Margin Improves To +60%
- Q3 technology services revenue up +66% from Q2 2022 hitting approximately $920K
- Q3 3D modeling revenue surges over +192% versus Q2 2022
- Q3 3D model production increased +110% versus Q2 2022
- Q3 technology services gross profit margin improves to +60% versus 37% reported in Q2 2022
- Q3 gross profit was approximately $555K on 920K in Q3 technology revenue with a gross profit margin of 60%
Nextech AR Solutions Corp. (“Nextech” or the “Company”) (OTCQB: NEXCF) (CSE: NTAR) (FSE: EP2), a Metaverse Company and leading provider of augmented reality (“AR”) wayfinding technologies, and 3D model services for the largest prime ecommerce platform, reports its financial and operating results for the third quarter 2022 ended September 30, 2022. Please join Evan Gappelberg, Chief Executive Officer and Andrew Chan, Chief Financial Officer today after the close November 17, 2022 at 5:00 P.M where Nextech will host a conference call to discuss Q3 results.
CEO Commentary:
“Q3 was a transformational quarter for Nextech AR, as demand, production and our revenue from 3D modeling has significantly ramped up. This is evident with our sequential production of 3D models up by over +110% and our sequential revenue of 3D models up by over +192% over Q2. Our Q3 figures are showing that our 3D modeling revenue is now growing exponentially. He continued, “With the announcement of a $700,000 3D model order to be delivered in Q4, we are confident that Q4 will be another record quarter for Nextech. As it is still quite early in Q4, we do expect to announce additional significant orders in the coming weeks as demand and our production capabilities will only continue to increase into Q4, 2023 and beyond.”
2022 Q3: 3D Model and Technology Services Financial Highlights
- Q3 technology services revenue up +66% from Q2 2022 hitting approximately $920K
- Q3 3D modeling revenue surges over +192% versus Q2 2022
- Q3 3D model production increased +110% versus Q2 2022
- Q3 technology services gross profit margin improves to +60% versus 37% in Q2 2022
- Q3 gross profit was approximately $555K on 920K in Q3 technology revenue with a gross profit margin of 60%
2022 Q3: Legacy E-commerce Business Results
- E-commerce generated over $2 million of revenue during the wind-down this quarter, bringing in over $800K of cash in Q3, and in Q4 to date has brought in additional cash achieving the Company’s set goal of bringing in $1 million to $2 million in cash
- The Company expects to be fully out of the legacy e-commerce business in Q4, 2022
2022 Q3 Totals
- Total revenue for the quarter was $3 million
- Total gross profit for the quarter was approximately $1.34 million
2022 Q4 Outlook
- $700,000 3D model order to be delivered in Q4, 2022
- Several quotes have been issued for large RFPs, which could close in Q4 2022
- Ramp up of 3D model production to meet the growing demand from the largest Prime ecommerce marketplace as well as re-orders, sets the stage for a substantial increase in 3D model production in Q4, 2022 and continuing in 2023
ARway
- Trading in ARway began on October 26, 2022. With a current market price of approximately $2 per share, Nextech’s 13 million share ownership is valued at about $26 million dollars.
Condensed Consolidated Statements of Financial Position
| As at | ||||||
| September 30, 2022 | December 31, 2021 | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash & cash equivalents | $ |
5,278,516 |
|
$ |
7,237,296 |
|
| Receivables (Note 4) |
|
624,694 |
|
|
1,081,164 |
|
| Deferred asset (Note 7) |
|
260,639 |
|
|
- |
|
| Contract asset (Note 14) |
|
261,692 |
|
|
386,202 |
|
| Prepaid expenses (Note 5) |
|
472,442 |
|
|
749,474 |
|
| Inventory (Note 6) |
|
640,852 |
|
|
3,389,098 |
|
| Non-current assets held for sale (Note 17) |
|
534,664 |
|
|
- |
|
|
8,073,499 |
|
|
12,843,234 |
|
|
| Non-current assets | ||||||
| Equipment (Note 8) |
|
354,527 |
|
|
377,242 |
|
| Right-of-use asset (Note 9) |
|
919,096 |
|
|
1,079,319 |
|
| Intangible assets (Note 10) |
|
4,200,687 |
|
|
6,419,934 |
|
| Goodwill (Note 10) |
|
7,061,970 |
|
|
8,790,529 |
|
| Total assets | $ |
20,609,779 |
|
$ |
29,510,258 |
|
| Liabilities and Shareholders' Equity | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities (Note 11) | $ |
2,309,942 |
|
$ |
2,759,017 |
|
| Deferred revenue (Note 14) |
|
471,835 |
|
|
609,001 |
|
| Lease liability (Note 9) |
|
259,348 |
|
|
290,357 |
|
|
3,041,125 |
|
|
3,658,375 |
|
|
| Non-current liabilities | ||||||
| Lease liability (Note 9) |
|
644,420 |
|
|
786,755 |
|
| Deferred income tax liability |
|
399,962 |
|
|
712,215 |
|
| Loan payable |
|
- |
|
|
90,896 |
|
| Total liabilities |
|
4,085,507 |
|
|
5,248,241 |
|
| Shareholders' Equity | ||||||
| Share capital (Note 12) |
|
82,185,705 |
|
|
70,570,760 |
|
| Reserves |
|
12,608,012 |
|
|
10,671,525 |
|
| Accumulated other comprehensive income |
|
1,790,153 |
|
|
1,978,469 |
|
| Deficit |
|
(80,059,598 |
) |
|
(58,958,737 |
) |
|
16,524,272 |
|
|
24,262,017 |
|
|
| Total liabilities and shareholders' equity | $ |
20,609,779 |
|
$ |
29,510,258 |
|
Condensed Consolidated Statements of Comprehensive Loss
| Three months ended | Three months ended | Nine months ended | Nine months ended | |||||||||
| September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||
| Revenue (Note 14) | $ |
3,012,440 |
|
$ |
5,524,902 |
|
$ |
8,755,637 |
|
$ |
18,885,741 |
|
| Cost of sales (Note 15) |
|
(1,668,490 |
) |
|
(3,895,320 |
) |
|
(5,159,245 |
) |
|
(11,961,736 |
) |
| Gross profit |
|
1,343,950 |
|
|
1,629,582 |
|
|
3,596,392 |
|
|
6,924,005 |
|
| Operating expenses: | ||||||||||||
| Sales and marketing (Note 15) |
|
1,702,695 |
|
|
4,187,583 |
|
|
6,022,831 |
|
|
12,837,426 |
|
| General and administrative (Note 15) |
|
2,592,343 |
|
|
3,704,359 |
|
|
10,903,087 |
|
|
9,746,546 |
|
| Research and development (Note 15) |
|
1,157,408 |
|
|
1,863,709 |
|
|
3,064,874 |
|
|
5,386,473 |
|
|
5,452,446 |
|
|
9,755,651 |
|
|
19,990,792 |
|
|
27,970,445 |
|
|
| Other expense (income) | ||||||||||||
| Stock-based compensation (Note 12) |
|
311,301 |
|
|
(574,131 |
) |
|
1,768,392 |
|
|
2,384,912 |
|
| Amortization (Note 10) |
|
597,354 |
|
|
682,889 |
|
|
2,076,161 |
|
|
1,276,798 |
|
| Right of use amortization (Note 9) |
|
77,624 |
|
|
64,735 |
|
|
204,476 |
|
|
144,057 |
|
| Gain on short-term investments |
|
(90,744 |
) |
|
- |
|
|
(90,744 |
) |
|
(219,321 |
) |
| Gain on contingent consideration |
|
- |
|
|
102,400 |
|
|
- |
|
|
(1,413,648 |
) |
| Depreciation (Note 8) |
|
36,941 |
|
|
37,286 |
|
|
111,182 |
|
|
97,321 |
|
| Impairment of intangible assets (Note 10) |
|
- |
|
|
- |
|
|
2,702,313 |
|
|
- |
|
| Foreign exchange gain |
|
(566,648 |
) |
|
(252,992 |
) |
|
(965,988 |
) |
|
(371,369 |
) |
|
365,828 |
|
|
60,187 |
|
|
5,805,792 |
|
|
1,898,750 |
|
|
| Loss before income taxes |
|
(4,474,324 |
) |
|
(8,186,256 |
) |
|
(22,200,192 |
) |
|
(22,945,190 |
) |
| Current income tax expense |
|
(7,128 |
) |
|
- |
|
|
(21,384 |
) |
|
- |
|
| Deferred income tax recovery |
|
126,777 |
|
|
- |
|
|
387,562 |
|
|
- |
|
| Net loss from operations | $ |
(4,354,675 |
) |
$ |
(8,186,256 |
) |
$ |
(21,834,014 |
) |
$ |
(22,945,190 |
) |
| Income (loss) from discontinued operations (Note 17) | $ |
(49,090 |
) |
$ |
(30,418 |
) |
$ |
733,153 |
|
$ |
(343,250 |
) |
| Other comprehensive loss | ||||||||||||
| Exchange differences on translating foreign operations, continuing operations |
|
(183,470 |
) |
|
410,785 |
|
|
(205,569 |
) |
|
293,753 |
|
| Exchange differences on translating foreign operations, discontinued operations (Note 17) |
|
10,286 |
|
|
2,769 |
|
|
17,253 |
|
|
2,343 |
|
| Total comprehensive loss | $ |
(4,576,949 |
) |
$ |
(7,803,120 |
) |
$ |
(21,289,177 |
) |
$ |
(22,992,344 |
) |
| Income (loss) per common share | ||||||||||||
| Basic and diluted loss per common share, continuing operations |
|
(0.05 |
) |
|
(0.09 |
) |
|
(0.22 |
) |
|
(0.28 |
) |
| Basic and diluted loss per common share, discontinued operations |
|
- |
|
|
- |
|
|
0.01 |
|
|
- |
|
Weighted average number of common shares outstanding |
||||||||||||
Basic and diluted |
98,641,286 |
86,125,077 |
99,201,669 |
82,002,671 |
||||||||
Condensed Consolidated Statements of Cash Flows
| Three months ended | Three months ended | Nine months ended | Nine months ended | |||||||||
| September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||
| Cashflows from operating activities | ||||||||||||
| Net loss | $ |
(4,354,675 |
) |
$ |
(8,186,256 |
) |
$ |
(21,834,014 |
) |
$ |
(22,945,190 |
) |
| Discontinued operations |
|
(49,090 |
) |
|
(30,418 |
) |
|
733,153 |
|
|
(343,250 |
) |
| Items not affecting cash | ||||||||||||
| Amortization of intangible assets |
|
597,354 |
|
|
682,889 |
|
|
2,076,161 |
|
|
1,276,798 |
|
| Impairment of intangible assets and goodwill |
|
- |
|
|
- |
|
|
2,702,313 |
|
|
- |
|
| Deferred income tax recovery |
|
(126,777 |
) |
|
- |
|
|
(387,562 |
) |
|
- |
|
| Amortization of right to use asset |
|
77,624 |
|
|
13,466 |
|
|
204,476 |
|
|
92,788 |
|
| Depreciation of property and equipment |
|
36,941 |
|
|
37,286 |
|
|
111,182 |
|
|
97,321 |
|
| Gain on digital assets |
|
- |
|
|
- |
|
|
- |
|
|
(219,321 |
) |
| Gain on short-term investment |
|
(90,744 |
) |
|
- |
|
|
(90,744 |
) |
|
- |
|
| Gain on contingent consideration |
|
- |
|
|
102,400 |
|
|
- |
|
|
(1,413,648 |
) |
| Shares for services |
|
581,286 |
|
|
78,535 |
|
|
1,446,852 |
|
|
1,378,382 |
|
| Stock-based compensation |
|
311,301 |
|
|
(574,131 |
) |
|
1,768,392 |
|
|
2,384,912 |
|
| Changes in non-cash working capital balances | ||||||||||||
| Receivables |
|
(223,510 |
) |
|
(797,207 |
) |
|
438,862 |
|
|
(582,729 |
) |
| Deferred asset |
|
(107,454 |
) |
|
- |
|
|
(260,639 |
) |
|
- |
|
| Contract asset |
|
(68,057 |
) |
|
69,342 |
|
|
124,510 |
|
|
(23,387 |
) |
| Prepaid expenses |
|
59,727 |
|
|
411,727 |
|
|
277,032 |
|
|
459,252 |
|
| Inventory |
|
1,228,785 |
|
|
(514,123 |
) |
|
2,251,124 |
|
|
(1,369,957 |
) |
| Accounts payable and accrued liabilities |
|
(342,533 |
) |
|
1,399,775 |
|
|
(451,613 |
) |
|
1,305,476 |
|
| Deferred revenue |
|
49,695 |
|
|
133,360 |
|
|
(137,166 |
) |
|
1,190,248 |
|
| Cashflows from operating activities, continuing operations | $ |
(2,716,519 |
) |
$ |
(6,804,199 |
) |
$ |
(11,248,643 |
) |
$ |
(18,288,269 |
) |
| Cashflows from operating activities, discontinued operations |
|
296,392 |
|
|
(369,156 |
) |
|
220,962 |
|
|
(424,036 |
) |
| Cashflows from investing activities | ||||||||||||
| Purchase of equipment |
|
(15,951 |
) |
|
(27,653 |
) |
|
(83,606 |
) |
|
(138,572 |
) |
| Proceeds from sale of digital assets |
|
- |
|
|
- |
|
|
- |
|
|
2,765,356 |
|
| Interest on lease liability |
|
(8,441 |
) |
|
- |
|
|
(22,043 |
) |
|
- |
|
| Net cash provided by (used in) investing activities, continuing operations | $ |
(24,392 |
) |
$ |
(27,653 |
) |
$ |
(105,649 |
) |
$ |
2,626,784 |
|
| Cashflows from financing activities | ||||||||||||
| Repayment of loan |
|
(90,896 |
) |
|
- |
|
|
(90,896 |
) |
|
- |
|
| Proceeds from exercise of options and warrants |
|
- |
|
|
123,986 |
|
|
- |
|
|
1,416,934 |
|
| Proceeds from Employee Pay Program |
|
1,488,526 |
|
|
- |
|
|
1,488,526 |
|
|
- |
|
| Proceeds from private placement, net of issuance costs |
|
- |
|
|
- |
|
|
8,938,406 |
|
|
- |
|
| Proceeds from public offering, net of issuance costs |
|
- |
|
|
- |
|
|
- |
|
|
12,632,937 |
|
| Payment of lease obligations |
|
(90,934 |
) |
|
(13,145 |
) |
|
(238,701 |
) |
|
(148,923 |
) |
| Payment of contingent consideration |
|
- |
|
|
(18,902 |
) |
|
- |
|
|
(18,902 |
) |
| Net cash provided by (used in) financing activities, continuing operations | $ |
1,306,696 |
|
$ |
91,939 |
|
$ |
10,097,335 |
|
$ |
13,882,047 |
|
| Change in cash during the period |
|
(1,137,823 |
) |
|
(7,109,069 |
) |
|
(1,035,995 |
) |
|
(2,203,474 |
) |
| Cash, beginning of period |
|
7,063,268 |
|
|
15,395,005 |
|
|
7,237,296 |
|
|
10,684,952 |
|
Effects of foreign exchange on cash |
|
(634,979 |
) |
|
(27,373 |
) |
|
(910,835 |
) |
|
(222,914 |
) |
| Cash, end of period, continuing operations |
|
5,278,516 |
|
|
8,258,563 |
|
|
5,278,516 |
|
|
8,258,563 |
|
| Cash, end of period, discontinued operations |
|
11,950 |
|
|
- |
|
|
11,950 |
|
|
- |
|
| Cash, end of period | $ |
5,290,466 |
|
$ |
8,258,563 |
|
$ |
5,290,466 |
|
$ |
8,258,563 |
|
| Supplemental cash flow information | ||||||||||||
| Taxes paid |
|
220 |
|
|
(224 |
) |
|
21,790 |
|
|
8,743 |
|
| Interest paid |
|
5,600 |
|
|
9,022 |
|
|
23,457 |
|
|
16,298 |
|
| Interest received |
|
34,392 |
|
|
11,956 |
|
|
73,721 |
|
|
33,426 |
|
Conference Call Details:
Title: Nextech AR Solutions Corp. Announces Third Quarter 2022 Earnings & Conference
Call Date: Thursday November 17, 2022.
Time: 05:00 PM (GMT-04:00) Eastern Time (US and Canada)
Toll Free Dial-In Number: 1 (888) 330-2024
International Dial-In Number: 1 (646) 960-0187
Conference ID: 7778367
Webcast Link: https://events.q4inc.com/attendee/348498012
For those unable to join the live event, a recording of the presentation will be posted on the Company's investor relations website.
To learn more, please follow us on Twitter, YouTube, Instagram, LinkedIn, and Facebook, or visit our website: https://www.Nextechar.com.
On behalf of the Board of Nextech AR Solutions Corp.
Evan Gappelberg
CEO and Director
866-ARITIZE (274-8493)
About Nextech AR
Nextech AR Solutions is the engine accelerating the growth of the Metaverse. Using breakthrough AI, Nextech AR is able to quickly, easily and affordably ARitize (transform) vast quantities and varieties of existing assets at scale making products, people and places ready for interactive 3D use, giving creators at every level all the essential tools they need to build out their digital AR vision in the Metaverse. Our platform agnostic tools allow brands, educators, students, manufacturers, creators, and technologists to create immersive, interactive and the most photo-realistic 3D assets and digital environments, compose AR experiences, and publish them omnichannel. With a full suite of end-to-end AR solutions in 3D Commerce, Education, Events, and Industrial Manufacturing, Nextech AR is in a unique position to meet the needs of the world’s biggest brands.
On October 26, 2022 Nextech AR spun out its spatial computing platform, “ARway” as a stand alone public Company. Nextech AR retained a control ownership in ARway Corp. with 13 million shares, or a 50% stake. ARway is currently listed on the Canadian Securities Exchange (CSNX:ARWY), in USA on the (OTC: ARWYF) and Internationally on the Frankfurt Stock Exchange (FSE: E65). ARway Corp. is disrupting the augmented reality wayfinding market with a no-code, no beacon spatial computing platform enabled by visual marker tracking.
To learn more about ARway, visit https://www.arway.ai/.
Forward-looking Statements
The CSE has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
Certain information contained herein may constitute “forward-looking information” under Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as, “will be” or variations of such words and phrases or statements that certain actions, events or results “will” occur. Forward-looking statements regarding the completion of the transaction are subject to known and unknown risks, uncertainties and other factors. There can be no assurance that such statements will prove to be accurate, as future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. Nextech will not update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws.
View source version on businesswire.com: https://www.businesswire.com/news/home/20221117006024/en/
Contacts
For further information:
Investor Relations
Lindsay Betts
investor.relations@Nextechar.com
866-ARITIZE (274-8493) Ext 7201
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