Galaxy Next Generation (GAXY) was a huge penny stock winner back in August. Shares spiked from $.005 to $.06 in less than a month. The rally came after we at Insider Financial profiled the stock as one of the best back-to-school plays for our more than 100,000 subscribers.
Now, shares have retraced and are back around the penny level. We see Galaxy Next Generation (GAXY) getting set to make another move as the business is booming. Furthermore, Galaxy Next Generation CEO Gary LeCroy is one of the few CEOs in penny land that is doing exactly what he says he will do.
In this article, we take a look at the bull case for Galaxy Next Generation (GAXY) and why smart investors will want to buy the dip.
Galaxy Next Generation (GAXY)
First up, here’s a little background info for those not familiar with Galaxy Next Generation (GAXY). Galaxy Next Generation is a provider of interactive learning technology solutions that allows the presenter and participant to engage in a fully collaborative instructional environment.
Galaxy’s products include Galaxy’s own private-label interactive touch screen panel as well as numerous other national and international branded peripheral and communication devices. Galaxy’s distribution channel consists of 22+ resellers across the U.S. who primarily sell the Company’s products within the commercial and educational market.
Galaxy does not control where resellers focus their resell efforts, although generally, the K-12 education market is the largest customer base for Galaxy products – comprising nearly 90% of Galaxy’s sales.
CLASSROOM TECHNOLOGY SOLUTIONS ACQUISITION
Last month, we reported that Galaxy Next Generation (GAXY) was set to close on its acquisition of Classroom Technology Solutions in mid-October. On exactly October 16th, Galaxy Next Generation closed its asset purchase of Classroom Technology Solutions
This is a big deal as it’s important than when a CEO says something will happen and it does. CEO Gary LeCroy is delivering as promised. This gives investors confidence that Galaxy Next Generation (GAXY) is a long-term play.
Classroom Technology Solutions has generated over $35 million in revenues over the past 11 years. The deal is synergistic as many CTS products will enhance the current and future Galaxy product offerings. CTS has a robust portfolio of new products that will be released over the coming year.
CTS is a leader in the development of sophisticated technologies used in the education marketplace and other collaborative environments. Many of CTS’s products qualify for the “Made in America” distinction while others are a combination of U.S. and offshore products. CTS owns and markets several industry-recognized brands:
- “A-VisionMounts”, projector and flat-panel mounts, carts, and stands
- “ClassCam”, line of connected and wireless document cameras
- “ClassSlate”, wireless interactive tablets
- “TouchWorks”, interactive whiteboards
The purchase of CTS’s assets will prove to be accretive to Galaxy’s bottom line. As part of the purchase agreement, Galaxy is gaining access to not only years of customer support to the CTS brands, but also years of buying power from the CTS president, Cy Marshall.
Cy will be joining the Galaxy team as part of the acquisition as Galaxy’s Product Officer. His relationships with global vendors have already proven to be helpful to Galaxy’s import activity by decreasing Galaxy’s cost of goods, by an average of 50%, on several products sold under the G2 brands. This is an important step for the Company as management strives towards profitability in the coming quarters.
CTS’s current product offerings include complementary components to the ever-changing and ever-growing product line of Galaxy. Galaxy Next Generation (GAXY) will be adding their line of projector and panel mounts to their offerings, as well as their classroom speaker line, which is being manufactured in the Jacksonville office (an important addition to Galaxy’s OEM product development).
Galaxy Next Generation (GAXY) Debt Reduction
Galaxy Next Generation (GAXY) has decreased the liabilities and convertible debt reflected on the Company’s balance sheet in its most recent 10K filing by $2.5 million, including cash payments of $1 million and a combination of stock and cash for the additional $1.5 million.
Galaxy Next Generation (GAXY) has expanded into Australia with a distribution agreement with Technology Core, Inc. The distribution agreement expands the availability of Galaxy’s Intercom and Paging solution to Australia’s more than 10,000 registered schools.
Technology Core, Inc., Australia’s top interactive solutions provider, will be selling and distributing Galaxy’s Intercom and Paging solution under their brand of “HDi” as well as an OEM classroom audio version for their brand.
Key Financial Highlights for Q4 and FY 2020
- Revenue of $469,179 and $2,319,852, representing overall growth of 65% and 44%, respectively, in technology interactive panels, related products, and interactive learning technology solutions
- Deferred revenue of $1,133,992, representing 359% increase since June 30, 2019
- Gross Margin of 51%
- Total Assets increased 129% to $4,498,010
- Backlog increased to $2,589,000
Key Business Highlights for Q4 FY 2020
- Awarded $350,000 contract from Valdosta City School District in Georgia
- Awarded $250,000 contract from south Florida school district
- Awarded largest additional purchase order from Newton County, Georgia
- Plan to execute a letter of intent to acquire Classroom Technology Solutions, Inc.
- Launched Phoenix cloud-based bell and intercom system
- Partnered with Radix for enhanced device management
- Completed initial install of bell and intercom system at Thompson School County School District in Colorado
- Awarded $100,000 contract for bell and intercom system
- Launched Cov-Shield
$1.5 MILLION PURCHASE ORDER
In September, Galaxy Next Generation (GAXY) received a follow-on purchase order of $1.5 million from an OEM customer to provide its innovative audio products and accessories for use in the K-12 education market. This purchase order for 2,200 units is in addition to the initial order of 1,000 units, which are currently being shipped.
The purchase orders are being provided under a supply agreement for the 4,000 units in the first year and are renewable for up to two additional years. Gary LeCroy, Galaxy’s Chief Executive Officer, said:
“We are very pleased to have been chosen by this OEM customer to enable its audio system solution targeted for the K-12 education market. We believe that both its existing and future customers will be utilizing and implementing audio systems to integrate into their total district, school, and classroom technology solutions. Our OEM division is part of our vast expansion plan. As we continue to cultivate and grow the existing relationships we have, we are also developing new products and new relationships, with strategic partners, in our OEM distribution channel.”
Earlier, Galaxy Next Generation received a commitment for up to $600,000 in Cov-Shield products from a school district in southern Texas. The city is in the top ten most populous cities in Texas. The school district encompasses 31 schools for its more than 1,400 teachers and over 23,000 students. The commitment is for up to 35,000 Cov-Shield units as it gets ready to welcome back its teachers and students into a safe and protected classroom.
Galaxy Next Generation (GAXY) Business Is Booming
Schools, stores, the U.S. military academy, and U.S. presidential debates are all using plexiglass to protect people from the coronavirus. Demand is surging for plastic companies to create plexiglass components. Just look at what Galaxy Next Generation (GAXY) offers with Cov-Shield.
Cov-Shield is available in a variety of sizes from 22-inch to 72-inch and is easy to set up, easy to move, and easy to clean. Gary LeCroy, Galaxy’s Chief Executive Officer, commented:
“With the CDC guidelines in-place and schools trying to figure out how to go back to school and still follow the guidelines, this product is necessary. We also believe Cov-Shield will be in-demand for the business market as companies, small and large, look to re-enter their offices toward the end of 2020 and early-2021. In fact, we have already pre-sold to a restaurant group. We look forward to rolling-out Cov-Shield and helping make the classroom, office, and restaurant a safer and cleaner environment.”
In addition to Cov-Shield, GAXY stock offers TeacherView. Highlights of “TeacherView” Powered by G2 Software:
- Remote at home, local at school, or hybrid classrooms
- Share teacher or student screens and video camera
- Distribute content and share websites
- Use multi-user whiteboard for collaborative learning
- Respond silently to electronic “hand raises”
- View thumbnails of students’ screens in real-time
- Work alongside or remotely take control of screens
- Keep students on-task and apply device usage policies
- Lock screens to maximize attention and minimize distractions
- Limit access by blacklisting and whitelisting websites and apps
- Conduct surveys and quizzes
Galaxy Next Generation (GAXY) Bottom Line
Galaxy Next Generation (GAXY) has a backlog of $2,589,000. In the latest fiscal year, the company reported $2,319,852 in revenues. When you take into account the backlog, new contracts, and the acquisition of Classroom Technology Solutions, Galaxy Next Generation (GAXY) already has over $5 million in revenues lined up for FY 2021.
Considering that Galaxy Next Generation (GAXY) has a market cap of just $22 million, shares look awfully cheap trading at just 4x next year’s revenues. With strong demand for Cov-Shield and the COVID-19 pandemic continuing to rage across the globe, Galaxy Next Generation (GAXY) won’t be this cheap for much longer.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in OTCMKTS:GAXY or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.