NXT-ID Inc (NASDAQ:NXTD) announced this week that it had completed the acquisition of LogicMark LLC, a leading provider of unmonitored personal emergency response devices (PERS). We believe this is a great move by NXT-ID as LogicMark provides a clear runway for growth. While the stock pulled back a little on the news, we feel that the market is greatly underestimating NXT-ID and the company’s potential going forward.
Founded in 2006, LogicMark has revolutionized the personal emergency response system (PERS) industry by incorporating patented two-way voice communication technology directly in the medical alert pendant. With a focus on innovation, LogicMark provides a unique offering of medical alert systems that contribute to improving the quality of life for those choosing to continue to live independently. The key here is that as people age, more and more are choosing to live alone, which makes LogicMark an absolute necessity.
The price was $20,000,000, and $900,000 of stock and warrants. In addition, LogicMark’s selling equity holders may be paid an earn-out of up to $6,500,000 based on achieving certain performance goals within the next 18 months. NXT-ID financed the acquisition with a $15,000,000 senior secured debt facility provided by ExWorks Capital Fund and $4,500,000 of preferred equity provided by several institutional investors.
For the year ended December 31, 2015 LogicMark had audited revenue and net profit of $11.1 million and $3.1 million respectively. For the three months ended March 31, 2016, LogicMark had unaudited revenue and net profit of $3.3 million and $1.0 respectively. LogicMark is comprised of a staff of 22 full-time professionals, 3 part-time professionals, and 5 contractors. NXT-ID CEO Gino Pereira said:
“This is a significant milestone for the Company. LogicMark is a market leader in unmonitored PERS devices and we believe we can potentially add significant value by integrating our voice biometric technology as well as detection sensors and miniaturization to future versions of LogicMark products. In addition, the Company believes it can potentially enhance the retail presence of LogicMark products.”
According to Persistence Market Research, “the global personal emergency response systems market is estimated to be valued at US$3,421.3 Mn in 2016, and is projected to witness stable growth across all regions over the forecast period. Factors such as introduction of high-end products by key players and increasing awareness among people about personal emergency response systems are expected to fuel demand for these devices.”
The report further added that “according to the United Nations Department of Economic and Social Affairs, the world’s aging population was 900.9 Mn in 2015 and is expected to reach 1.4 Bn by 2030. Also, availability of insurance program to low-income individuals in developed countries is another factor expected to boost overall growth of the personal emergency response system market in the near future. The personal emergency response systems market is also expected to be driven by increased penetration of smartphone-based mobile applications among senior citizens and technological advancements in personal emergency response systems such as two-way voice communication and medication reminder.”
How LogicMark fits into the fold with NXT-ID is that NXT-ID can integrate its technology into its SmartCards. NXT-ID has a strong customer base already in place with its deal with WorldVentures, a privately-held leading direct seller of vacation and entertainment club memberships. NXT-ID has developed a DreamTrips card for WorldVentures’ 500,000 plus members.
Last December, WorldVentures entered into a Master Product Development Agreement with the company. Among other things, the development agreement provides an initial term of two years. Pursuant to the Development Agreement, WorldVentures has retained the company to design, develop and manufacture a series of Proprietary Products for distribution through WorldVentures’ network of sales representatives, members, consumers, employees, contractors or affiliates. The Proprietary Products will utilize the company’s existing Background Technology and customized hardware designs/solutions and software tools/applications developed by the company for WorldVentures.
The DreamTrips card allows WorldVentures members to load up to 10 records (credit cards, loyalty cards, identity cards, and other data) and additional records may be stored on WorldVentures’ DreamTrips mobile app and interchanged with the records on the SmartCard at the election of a Member. It can be used a payment method in the same way as a credit card, where accepted. Members can then earn points at select restaurants worldwide that can be used towards DreamTrips vacations. An added bonus is that members can engage and interact socially with other DreamTrips Members worldwide through its communication features.
Last month, NXT-ID received a $1.2 M dollar payment from WorldVentures as part of a total of $2.5 million for the first production run of the DreamTrips SmartCards to be delivered any day now. Worth noting is that WorldVentures also owns over 10 million shares of NXT-ID. There’s been some speculation that the two companies could eventually merge if WorldVentures founder Wayne Nugent chose to take his company public by doing a reverse merger with NXT-ID. We believe the LogicMark deal is just the latest piece of the puzzle and part of a master plan being orchestrated by Nugent and Pereira. We urge patience and will be monitoring NXTD closely. For the latest updates on NXTD, sign up for our free small cap newsletter today!
Disclosure: We have no position in NXTD and have not been compensated for this article.