written by reader Next Galaxy Corp? NXGA

By exmarlin21, September 18, 2014

I’d love your thoughts on Next Galaxy Corp.
Used to be Wiless Controls, hovering around $0.02 a share. In past couple of months, morphed into Next Galaxy (there is a decent amount of press behind that transaction). Entering the Virtual Reality software space with supposed applications to the Oculus Rift headset (Recently purchased by FaceBook for a ton of money).
Stock now up in the Twenty cent range, thinly traded, but the press seems legit.
Is this a slow burn pump and dump or is there something of substance here?
For some strange unknown reason, I spent a grand and bought 50k shares of Wiless Controls when it was $0.02, and then ”Next Galaxy” happened. Do I thank my lucky stars and get out for a potential 10x gain, or do I hold on and become a gazillionaire because Next Galaxy / Virtual Reality / Occulus Rift is the next big thing? HA!

My first post as an irregular, so I’m excited to hear some insight from all of you kicka$$ multi-talented investors and fraud fighters!
Exmarlin21

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Travis Johnson, Stock Gumshoe
September 18, 2014 9:16 pm

I’ve never heard of them before and there’s not a lot of promo material out on them that I see, so it’s probably not a big, active external pump and dump that’s being heavily promoted — but that doesn’t mean it’s not a promotional “wing and a prayer” or a company that insiders might be trying to pump up. It’s always good to be cautious about microcap penny stocks that suddenly change their business model to match a trend — penny stocks were becoming gold miners without mines back in the mid-2000s, then turning themselves into social media companies a year or tow later, then becoming 3D printing companies not long after that. I don’t know if that cynical opportunism is the case with these folks, but it’s a warning sign.

If I were in your situation, my impulse would probably be to sell and take the profit. Or, if I had some connection to the company or some reason to think they really had a differentiated product or a good position, keep a negligible number of shares but book profits on most. Their 10-K, just filed this week, indicates they have to raise $2 million right quick to get them through the coming year — don’t know if they’ve already done so, but looks like it’s a $14 million company with no real employees (officers are consultants, everyone else is apparently an independent contractor) or assets other than whatever that patent portfolio is that they say they bought in June, and presumably if they do have to sell stock it could be at perhaps half the current price or less, it would be shocking if that didn’t drive the stock down — particularly since they have only been in this particular business focus for three months and must be a long way from getting anything done.

That’s just my feeling from scanning a few pages of the 10-K — you can see it here, always read the actual filings if you want to have the clearest picture of what’s going on and, usually, what the risks are.

And the going concern stuff often helps think clearly about a company –this is from the 10-K too:

“We have a history of operating losses, and may continue to incur operating losses. We experienced losses from Inception. With respect to the audited year ending May 31, 2014, we incurred losses of $364,539 (compared with losses of $720,016 for the same period last year). We had negative working capital for the year ending May 31, 2014 of $1,500,454, (compared with negative working capital of $1,147,915for the same period last year), and a stockholders’ deficiency of $1, 500,454as of May 31, 2014 (compared with a stockholders’ deficiency of $1,147,915audited as of May 31, 2013). All of these developments raise substantial doubt about our ability to continue as a going concern. As a result of these losses and the losses incurred as of May 31, 2014, our auditors issued an opinion in their audit report for the year ended May 31, 2014 expressing uncertainty about the ability of our Company to continue as a going concern. This means that there is substantial doubt whether we can continue as an ongoing business without additional financing and/or generating profits from our operations. Presently, the monthly negative cash flow amounts to $25,000 and our available cash cannot sustain current operations for more than one month. In order to we want to sell additional shares of common stock or borrow additional funds and generate sufficient cash from operations to support our company for the next twelve months.

“We have no operations upon which to base an evaluation of our performance. We were previously in the business of providing consultation to business executives. We were never retained by anyone to provide such services. Accordingly, we have very limited business operating history. In May, 2012 we have sold our first functional prototype solution that enables the integration of 3rd party USB device into cellular gateway to connect through Wiless Controls-M2M platform. This prototype iteration was the final production design for production.”

They don’t have anywhere near $25,000, according to that same filing, though something may have happened since then. And I have no idea what the competition is in this space, but here’s what the 10-K says:

“Because we are small and in a start-up phase, we face stiff competition from other Machine-to-Machine companies that have far more capital than we do. Our competitive position within the industry is negligible in light of the fact that we have just started our operations. Older, well established competitors with records of success will attract qualified clients away from us. There are numerous competitors within our field. These competitors are moderately sized and ones we hope to emulate in the future. Those competitors have established reputations and have built extensive client relationships within the industry. Since we have just started operations, we cannot compete with them on the basis of reputation. We compete with them on the basis of price and services and we hope to be able to provide a higher quality personal service to our initial customers. We do this by spending and devoting more time to clients. We believe this higher quality personal service distinguishes us.”

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rondo watts
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rondo watts
December 9, 2014 7:13 pm

Has anyone contacted any of the officers of this company. Googling Mary Spio returns a lot of info. If this is real and they get funding this might turn out to be a winner. Any ideas as to how to find out what’s going on for real.

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