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NXT-ID (NXTD) stock research report

19 Aug NXT-ID (NXTD) stock research report

 

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We first mentioned NXT-ID (NXTD) in chat on Monday while the ticker was at $1.20/share.   One of our members brought it to our attention because they picked it up on their scanner.  Quite an impressive feat since this was the first day ever that the stock had even traded.

We immediately put out some details about the ticker including that it was a fresh new ticker that just started trading, that it had a very small float of only 1,380,000 shares, that the company was introducing new face identification software to the technology world, and that the share price looked very tightly controlled by just one market maker, GLEN.  Some members liked what they heard and bought in at between $1.20/share and $1.30/share.

Today we immediately saw the NXTD continue to shoot up in price quickly jumping to $1.40/share then to $1.55 share.  The price didn't slow down from there.  With GLEN continuing to dictate the action, NXTD continued to rise and rise and rise finally closing at $2.25/share up 73% on the day and up 87.5% from when we first mentioned it in chat.

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I hoped to have this research report out last night, but was unable to get it finished in time.  I'm taking this time to finish it now.

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The Set-up

NXT-ID Inc was created as a Delaware entity on February 8, 2012 as Trylon Government Systems Inc by Cheryll Calaguio who works for the GerstenSavage LLP with Gino Pereira and David Tunnell as the founders and officers of the entity.  The name of the entity was changed to NXT-ID Inc on June 25, 2012.

Gino Pereira (CEO, CFO, and director) had over 30 years of executive, operational and financial experience with technology companies in the United States, Europe and the Far East. Mr. Pereira was CFO and later CEO of Technest Holdings Inc., a publicly quoted defense contracting company under the ticker TCNH, from 2004 to 2011. Technest Holdings operated subsidiaries EOIR Technologies, Inc. and Genex Technologies, Inc.  In May of 2012, Technest Holdings Inc (TCNH) changed its name/symbol to AccelPath Inc (ACLP).  While TCNH was under Pereira's control the company offered 3D imaging, Intelligent Surveillance, and Facial Recognition services.  See the website here.

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TCNH was doing over $2.5 million in revenues annually, but the cost of business put NXTD into a bad toxic debt situation and in 2011, Pereira ended up selling control of the ticker leaving it at the mercy of the toxic lenders like Stephen Hicks of Southridge Partners who then destroyed the ticker causing the price to crash from $.50/share down to $.0002/share as of today's close.

David Tunnell (CTO, VP) is an expert in biometrics and is the inventor of a variety of miniature technologies for remote distributed sensors. Mr. Tunnell has over 23 years of experience in developing high-technology solutions for the US Government. He was the divisional director of 3D identification products at Technest Holdings Inc (TCNH), from 2003 to 2011. Prior to that he was at the National Security Agency (NSA) serving in operations, support, and development and later at L3 Communications where he served as Director of Engineering, overseeing the development of SIGINT solutions and served as the primary interface with customers, bridging the gap between customer requirements and system design and engineering.

Pereira and Tunnell also added Major General David R. Gust, USA, Ret as an independent director for NXT-ID Inc.  General Gust presently does consulting work for his own company, David R. Gust & Associates, LLC.  Between April 2007 and May 2009, General Gust was the President of USfalcon, a privately-held company working with the U.S. Defense sector, primarily in information technology.  General Gust retired from the United States Army in 2000 after completing a career of 34 years of service.

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The acquisition

After leaving Technest Holdings Inc, Pereira and Tunnell transferred their main assets out of TCNH and into a new entity that they formed in Florida called 3D-ID LLC found here.

Periera and Tunnell then signed an agreement between 3D-ID LLC and NXT-ID Inc to transfer full ownership of 3D-ID LLC and its assets into the NXT-ID Inc shell in exchange for 20,000,000 shares of NXT-ID Inc stock.

Gino Pereira got 11,500,000 shares

David Tunnell got 8,000,000 shares

We are not told who got the other 500,000 shares.

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Seed Shareholders/Public Offering

Prior to going public, NXT-ID Inc sold 836,000 shares in a public offering for $.25/share raising $209,000.  802,000 shares ended up going to Chad Verdi.

NXT-ID Inc also issued 120,000 shares to ECON US Inc (Dawn Van Zant) for investor relation services.

Dawn Van Zant previously had worked for Chad Verdi providing Investor Relations services when Chad Verdi was the Chairman of EUROTECH, Ltd. (AMEX: EUO) back in 2001.

Chad Verdi and Dawn Van Zant also key insiders together for HereYouGo.com and Wild Heart Ranch Inc in 2001 and Markland Technologies, Inc (MKLD) in 2003.  Another MKLD insider was toxic lender, Stephen Hicks.

With MKLD, Chad Verdi and Stephen Hicks acted as the toxic financiers (Verde through his entity, Bay View Capital LLC) and Dawn Van Zant provided Investor Relations services.  Later in 2009, Verdi would be cited in litigation as being guilty of violations by the Banking Commission related to how he obtained and sold MKLD stock.  MKLD had major business ties to Pereira and Tonnell's ticker, TCNH.   More about Stephen Hicks here.

Chad Verdi through his entity Verdi Consulting Inc was an insider as well as Stephen Hicks with Technest Holdings Inc (TCNH) from 2004 - 2011 while Pereira and Tonnell controlled that ticker.  So we know that Hicks and Verdi have a long relationship with Pereira and Tonnell.  Now we know why Verdi was brought along into NXT-ID Inc. 

Chad Verdi now runs a film company and Dawn Van Zant also runs InvestorIdeas.  You can find them both linked together recently in this press release about Verdi trying to buy the rights for the Amanda Knox story for $1,000,000.

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Verde is obviously a key (if not the key) insider.

Basically Verdi, Pereira, and Tonnell are recycling what they started 10 years earlier with TCNH with the help of close friend Van Zant.  So when will Stephen Hicks make his appearance?

Here is a complete list of original seed shareholders for NXT-ID Inc.

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Going Public

On January 31, 2013, NXT-ID Inc filed an S-1 to go public and to register up to 1,000,000 units for sale at $1.00/share which include 1 common share and a warrant to purchase additional shares in the future.

Attorneys David Danovitch, Esq., Zachary Blumenthal, Esq., and Robinson Brog Leinwand Greene Genovese & Gluck P.C. helped with the filing.

The S-1 filing was approved on May 10, 2013.

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Since Going Public

Since getting the S-1 approved, NXTD has sold 304,600 units at $1.00/unit raising $304,600.

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More about NXT-ID Inc (NXTD)

NXTD currently has licensed twenty-two (22) U.S. patents all of which previously belonged to TCNH.

NXTD is currently an early stage technology company that is focused on products, solutions, and services that have a need for biometric secure access control. NXTD has three distinct lines of business that they believe will form the company: law enforcement, m-commerce, and biometric access control applications. The initial efforts will be focused on the secure products offering for the growing m-commerce market, most immediately a secure mobile electronic wallet. NXTD also anticipates using their core biometric facial recognition algorithms to develop a security application that can be used for corporations (industrial uses, such as enterprise computer networks) as well as individuals (consumer uses, such as smart phones, PDAs or personal computers). The ultimate plan calls for a suite of high level security products and facial recognition applications that can be utilized by law enforcement, the defense industry, and Homeland Security.

The four main products include:

Mobilebio Wockett which is a digital wallet: the wocket™ that reduces the number of cards in your wallet while supporting virtually every payment method currently available at Point-of-Sale (POS) at retailers around the world including magnetic stripe, EMV/NFC and barcode…all within a secure vault within your wallet.  Learn more at the Wockett website here.

Mobilebio BioCloud which is a cloud-based identity authentication solution for consumer applications and corporate security.

Mobilebio FaceMatch which is a modular facial recognition platform technology that can be applied to a variety of platforms including smartphones, tablets, laptops and desktop computers.

Mobilebio VoiceMatch which is a modular voice recognition platform technology that can be applied to a variety of platforms including smartphones, tablets, laptops and desktop computers.

NXTD generated $250,000 in revenues from initial sales of its 3D FaceMatch biometric identification products during the year ended December 31, 2012, but so far haven't generated any new revenues since.

On August 16, 2013, NXTD got its trading symbol.  It saw its first trade on Monday, August 19, 2013.

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The Current Share Structure

Authorized - 100,000,000 shares
Outstanding - 21,440,600 shares
Gino Pereira - 11,500,000 shares (restricted)
David Tunnell - 8,000,000 shares (restricted)
Unnamed founder - 500,000 shares (restricted)
General Gust - 40,000 shares (restricted)
Float - 1,380,000 shares
Chad Verdi - 802,000 shares
Dawn Van Zant - 120,000 shares
Matthew Rich - 100,000 shares
Other Pre-IPO shareholders - 54,000 shares
Other consulting shares - 20,000 shares
Private Placement shareholders - 304,600 shares

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What we have learned so far

We know that NXTD has real technology that has helped generate over $2.5 million in revenues annually in the past.

We know that NXTD has a close knit group of insiders that have very tight control of the float.  At least 1,022,000 of the 1,380,000 free trading shares are owned by just 3 individuals.

We know that market maker GLEN is the main market maker controlling the stock price.  GLEN has become notorious for being involved in low float slow climbing tickers.

We know that NXTD is very much still under the radar.

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What we can expect from here

I do not think anybody should be investing in NXTD banking on the company becoming a future huge name in the ID security industry.   History has proven that over time the individuals involved in NXTD will eventually kill the ticker with toxic debt Notes set up to enrich those very same insiders just to move on to recycle the same technology all over again. 

I do think that people can bank on NXTD as possible slow climber with a low float well controlled by a very small group of 3 core insiders using market maker GLEN to help manipulate the share price up (which is obviously what has been going on so far).  How long the climb will continue will depend on how long insider are willing to hold those shares tightly and continue to manipulate the price up.  We've seen other tickers like UBIQ, ITEN, MOJO, SLNR, BSSP, and LNTP go much higher with bigger floats.

 

 

 

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