NexTech AR Solutions Reports Record Second Quarter 2020 Results

Toronto, Ontario, CANADA

VANCOUVER, British Columbia, Aug. 25, 2020 (GLOBE NEWSWIRE) -- NexTech AR Solutions (NexTech) (OTCQB: NEXCF) (CSE: NTAR) (FSE: N29), an emerging leader in augmented reality (AR) for eCommerce, AR learning applications, and AR-enhanced video conferencing and virtual events, reported record results for its second quarter ended June 30, 2020. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

Q2 2020 highlights:

  • Revenue grows 290% to $3.5 million
  • Gross Profit grows 484% to $2.1 million with a 61% margin
  • Working Capital of $5.6 million
  • Total Bookings $3.7 million
  • Full report has been filed and is available on SEDAR 

Q2 earnings will be released after the close today at 4:30pm

Bridge Name: NexTech AR Solutions
Conference ID: 597-9019
Dial in: +1 (435) 777-2200
Toll-Free + 1 (800) 309-2350

Evan Gappelberg, CEO of NexTech comments, “We are extremely pleased to report that our record second quarter 2020 results are continuing into Q3 and are showing strong momentum across our business segments. These results were driven by new customer additions, expansion of product lines and increases in conversions from our e-commerce channels. He continues “We are uniquely positioned with our augmented reality, e-commerce and InfernoAR video conferencing and virtual events business units to thrive in this new economy being led by a digital transformation across technology. There has never been more business opportunity in our lifetime for augmented reality, virtual learning, virtual conferences, or virtual events, and e-commerce and we see strong business trends continuing in Q3 and beyond.” 

Kashif Malik, CFO of NexTech comments, “Q2 has been an amazing quarter and I am thrilled to see the team firing on all cylinders by delivering on sales. With the successful integration of our Jolokia acquisition in Q2 we are now positioned for a rapid acceleration in our business as we continue to land more deals and look for additive acquisitions that further expand and grow our business.”

NexTech AR Solutions Corp.
Condensed Consolidated Interim Statements of Financial Position
(Unaudited - Expressed in Canadian dollars)

  June 30, 2020December 31, 2019
Current assets   
Cash 6,282,197 2,849,344 
Receivables (Note 4) 264,104 403,651 
Prepaid expenses and deposits 195,990 200,650 
Inventory 1,681,465 1,353,584 
Total current assets 8,423,756 4,807,229 
Non-current assets   
Equipment (Note 5) 242,303 146,555 
Intangible assets (Note 6) 2,250,734 1,420,552 
Goodwill (Note 6) 3,997,440 2,262,527 
Total non-current assets 6,490,477 3,829,634 
TOTAL ASSETS 14,914,233 8,636,863 
Current liabilities   
Accounts payable and accrued liabilities (Note 7) 1,748,473 1,243,528 
Other payables (Note 8) - 230,174 
Contingent consideration (Note 3) 1,067,181 - 
Total current liabilities 2,815,654 1,473,702 
Long-term liabilities   
Deferred income tax liability 48,478 96,956 
Total Long-term liabilities 48,478 96,956 
TOTAL LIABILITIES 2,864,132 1,570,658 
Share capital (Note 10) 23,562,376 15,210,041 
Convertible debentures (Note 9) - 1,025,595 
Reserves (Note 10) 2,565,234 1,407,330 
Deficit (14,077,509)(10,576,761)
TOTAL SHAREHOLDERS’ EQUITY 12,050,101 7,066,205 

NexTech AR Solutions Corp.
Condensed Consolidated Interim Statements of Comprehensive Loss
For the three and six months ended June 30, 2020 and 2019
(Unaudited - Expressed in Canadian dollars)

 For the three months ended June 30,For the six months ended June 30,
Revenue3,529,029 905,915 6,021,014 1,807,025 
Cost of sales(1,359,294)(534,094)(2,503,430)(1,068,187)
Gross profit2,169,735 371,821 3,517,584 738,838 
Operating expenses    
Sales and marketing1,547,995 558,743 3,047,310 1,255,695 
General and administrative1,927,105 462,116 2,690,187 844,170 
Research and development563,671 164,867 937,002 748,776 
Amortization (Note 6)132,458 31,476 220,711 62,951 
Depreciation (Note 5)17,434 8,249 27,283 24,342 
Foreign exchange loss (gain)6,283 70,334 7,977 27,352 
Total operating expenses4,194,946 1,295,785 6,930,470 2,963,287 
Operating loss(2,025,211)(923,964)(3,412,886)(2,224,449)
Loss before income taxes(2,025,211)(923,964)(3,412,886)(2,224,449)
Deferred income tax recovery24,239 - 48,478 - 
Net loss(2,000,972)(923,964)(3,364,408)(2,224,449)
Other comprehensive income (loss)    
Exchange differences on translating foreign operations(308,552)- 179,764 - 
Total comprehensive loss(2,309,524)(923,964)(3,184,644)(2,224,449)
Loss per common share    
Basic and diluted loss per common share(0.04)(0.02)(0.05)(0.04)
Weighted average number of common shares outstanding65,713,035 53,790,361 63,147,313 52,356,663 

NexTech AR Solutions Corp.
Condensed Consolidated Interim Statements of Changes In Shareholders' Equity
For the six months ended June 30, 2020 and 2019
(Unaudited - Expressed in Canadian dollars)

 Number of sharesShare capitalEquity portion of convertible debentureReservesDeficitTotal
Balance, December 31, 201843,687,872 6,365,393  -  423,463  (2,345,482) 4,443,374 
Partial escrow cancellation(400,000)-  -  -  -  - 
Acquisition of AR Ecommerce LLC2,000,000 1,620,000  -  -  -  1,620,000 
Shares released from escrow for services- 60,000  -  -  -  60,000 
Shares issued for exercise of warrants8,461,500 2,605,750  -  -  -  2,605,750 
Shares issued for acquisition payable100,000 66,630  -  -  -  66,630 
Private placement566,000 339,600  -  -  -  339,600 
Stock-based compensation- -  -  523,702  -  523,702 
Net loss- -  -  -  (2,224,449) (2,224,449)
Balance, June 30, 201954,415,372 11,057,373  -  947,165  (4,569,931) 7,434,607 
Balance, December 31, 201960,509,250 15,210,041  1,025,595  1,407,330  (10,576,761) 7,066,205 
Convertible debentures1,910,163 1,161,935  (1,025,595) -  (136,340) - 
Shares issued for exercise of warrants2,057,504 1,734,861  -  -  -  1,734,861 
Shares issued for exercise of options1,195,666 381,600  -  -  -  381,600 
Shares issued for purchase of Jolokia1,000,000 1,491,889  -  -  -  1,491,889 
Shares issued to settle related party liability47,799 38,239  -  -  -  38,239 
Share-based payment810,006 648,005  -  864,899  -  1,512,904 
Private placement1,528,036 3,208,876  -  -  -  3,208,876 
Share issuance costs- (313,070) -  113,241  -  (199,829)
Net loss- -  -  -  (3,364,408) (3,364,408)
Translation of foreign operations- -  -  179,764  -  179,764 
Balance as at June 30, 202069,058,424 23,562,376  -  2,565,234  (14,077,509) 12,050,101 

NexTech AR Solutions Corp.
Condensed Consolidated Interim Statements of Cash Flows
For the three and six months ended June 30, 2020 and 2019
(Unaudited - Expressed in Canadian dollars)

 For the three months ended June 30,For the six months ended June 30,
Net loss(2,000,972)(923,964)(3,364,408)(2,224,449)
Items not affecting cash:    
Amortization of intangible assets132,458 31,476 220,711 62,951 
Deferred income tax recovery(24,239)- (48,478)- 
Depreciation of property and equipment17,434 8,249 27,283 24,342 
Shares issued to settle related party liability- - 38,239  
Share-based payments861,958 161,851 1,512,904 523,702 
Shares released from escrow for services- - - 60,000 
Option and warrant exercised shares outstanding(183,737)- (183,737)- 
Changes in non-cash working capital items    
Receivables356,792 (262,168)139,547 (475,643)
Prepaid expenses and deposits23,735 (237,958)4,660 (647,845)
Accounts payable and accrued liabilities673,907 (709,979)480,787 (879,459)
Other payables(97,771)- (230,174)- 
Net cash used in operating activities(323,506)(2,332,103)(1,730,547)(4,223,858)
Cash acquired in a business combination- - - 128,670 
Cash paid for acquisition of HootView- - - (85,664)
Purchase of equipment- - - (12,125)
Net cash used in investing activities- - - 30,881 
Proceeds from exercise of options and warrants1,404,022 - 2,116,461 2,605,750 
Net proceeds from private placement3,009,047 339,600 3,009,047 339,600 
Net cash provided by financing activities4,413,069 339,600 5,125,508 2,945,350 
Foreign exchange(117,022)(266,280)37,892 (170,541)
Net change in cash3,972,541 (2,258,782)3,432,853 (1,418,168)
Cash, beginning2,309,656 2,487,471 2,849,344 1,646,858 
Cash, ending6,282,197 228,689 6,282,197 228,689 

(Above excerpts from the condensed consolidated interim financial statements should be read in conjunction with the financial statement notes).

Non-IFRS Measures
This News Release makes reference to certain non-IFRS measures such as “Total Bookings” and “Backlog”. These non-IFRS measures are not recognized, defined or standardized measures under IFRS. Our definition of Total Bookings and Backlog will likely differ from that used by other companies and therefore comparability may be limited.

Total Bookings and Backlog should not be considered a substitute for or in isolation from measures prepared in accordance with IFRS. These non-IFRS measures should be read in conjunction with our condensed consolidated interim financial statements and the related notes thereto as at and for the three and six months ended June 30, 2020. Readers should not place undue reliance on non-IFRS measures and should instead view them in conjunction with the most comparable IFRS financial measures. See the reconciliations to these IFRS measures below:

 Three months ended June 30, Six months ended June 30,
  2019  2020
Total Bookings$3,680,111  $905,915  $6,239,291  $1,807,025 
Total Revenue 3,529,029   905,915   6,021,014   1,807,025 
Adjustment for bookings 151,082   -   218,277   - 
Adjustment for backlog (51,000)  -   (118,195)  - 
Backlog$100,082  $-  $100,082  $- 

About NexTech AR
NexTech is one of the leaders in the rapidly growing Augmented Reality market estimated to grow from USD $10.7B in 2019 and projected to reach USD $72.7B by 2024 according to Markets & Markets Research; it is expected to grow at a CAGR of 46.6% from 2019 to 2024.

The company is pursuing four verticals:

InfernoAR: An advanced Augmented Reality and Video Learning Experience Platform for Events, is a SaaS video platform that integrates Interactive Video, Artificial Intelligence and Augmented Reality in one secure platform to allow enterprises the ability to create the world’s most engaging virtual event management and learning experiences. Automated closed captions and translations to over 64 languages. According to Grandview Research the global virtual events market in 2020 is $90B and expected to reach more than $400B by 2027, growing at a 23% CAGR. With NexTech’s InfernoAR platform having augmented reality, AI, end-to-end encryption and built in language translation for 64 languages, the company is well positioned to rapidly take market share as the growth accelerates globally.

ARitize™ For eCommerce: The company launched its SaaS platform for webAR in eCommerce early in 2019. NexTech has a ‘full funnel’ end-to-end eCommerce solution for the AR industry including its Aritize360 app for 3D product capture, 3D/AR ads, its Aritize white label app, its ‘Try it On’ technology for online apparel, 3D and 360-degree product views, and ‘one click buy’.

ARitize™ 3D/AR Advertising Platform: Launched in Q1 2020 the ad platform will be the industry's first end-to-end solution whereby the company will leverage its 3D asset creation into 3D/AR ads. In 2019, according to IDC, global advertising spend will be about $725 billion.

ARitize™ Hollywood Studios: The studio is in development producing immersive content using 360 video, and augmented reality as the primary display platform.

To learn more, please follow us on Twitter, YouTube, Instagram, LinkedIn, and Facebook, or visit our website:

On behalf of the Board of NexTech AR Solutions Corp.
Evan Gappelberg
CEO and Director

For further information, please contact:

Evan Gappelberg
Chief Executive Officer

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”, “looking forward” or variations of such words and phrases or statements that certain actions, events or results “will” occur. Forward-looking statements regarding the Company increasing investors awareness are based on the Company’s estimates and are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of NexTech to be materially different from those expressed or implied by such forward-looking statements or forward-looking information, including capital expenditures and other costs. There can be no assurance that such statements will prove to be accurate, as actual results and 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.