XRG xReality Group

I’ve just started to investigate this company after seeing a few Strawpeople take interest in it. I’ve listed to Wini and Claude talk about it on the Small Cap Wrap investing podcast and it was enough to pique my interest. I really like the idea of using virtual reality for training and have seen it in a variety of fields – technical training for trades i.e. electrical, hospitality etc., sports like golf and baseball, etc. I’ve put together a post to go over my initial thoughts and questions I have on this investment below (I answer a lot of these myself by the end. This feels like when you would ask Mum to find your missing shoes, only for them to seemingly appear before your eyes when she enters the room):

With the rapid advancement of technology we’re seeing, I’m curious to know what the capex will be on hardware, and how long today’s VR equipment will last before it’s considered obsolete. Obsolete is probably a too harsh a word, so I suppose I mean how long will it last before it’s outdated/ not top of their class? Will XRG be required to replace these, or will their clients own the products and need to upgrade by purchasing new units?

I’m also curious on how the business model works. The Texas DoD contract reads that XRG will supply the software, equipment and support, with potential for ongoing support over the next couple of years. Does this mean Texas DoD lease it for this period, or do they own the hardware/lease the software? I had wondered if it was similar to Zero Latency – a VR entertainment company in QLD (potentially other states) where you arrive at a warehouse, pay the session fee, and put their gear on for a set time. I could see XRG potentially doing the same thing, that way they have military and other armed forces traveling to the location to partake in training at a XRG Facility. This could be opened to the public seeing as America has relaxed gun laws compared to Australia – of course there are many implications of offering tactical training to everyday citizens which I won’t go into, it’s just another potential source of revenue that may work very well in the U.S. In saying that, I don’t believe this is how they do it(?).

XRG were also awarded a 2.1 million dollar grant from the Australian government a few years ago which they planned to use on implementing AI into their products. I feel like this is a company that will really benefit from advancements in AI – I imagine it will allow them to continuously create new, improved training simulations and scenarios for their clients at an accelerated pace, while keeping overheads to a minimum. I would like to understand this better; have they seen success yet, what is AI doing for them now and what is planned?

The other elephant in the room is the iFly component which they are actively looking to sell. I agree with many of the comments around this; it’s the right move and if done correctly, will clear their debt and raise their cash reserves. I love a company with little to no debt, so this would be a big tick for me. Is there any way for investors to see the current progress on this shy of announcements stating that they are attempting to sell it?

I was a bit underwhelmed with their socials. I had a look through YouTube as I was interested in seeing their product in action and found a few channels in their name. The most content I found was 6 videos posted all over 12 months ago. The majority of them went for less than 30 seconds, where the best one was a 2-3 minute clip from Nine News doing a story on the company with a little more glimpse inside the clients and what the simulations look like. Their Facebook’s latest post was from 2024. Maybe they need to ramp up the PR department?

I’ve just realized that I forgot to watch a meeting with CEO Wayne Jones on our forum – I’ll do that right now!

~an hour later..

Right so that was February 2025 – around 15 months ago. And it was brilliant. Andrew and Wayne went right through and answered a bunch of my questions, even ones I didn’t know I had!

·        Subscription model (most paid for 3 years up front) transitioning into monthly receipts

·        Hardware has 3 year expected life cycle.

·        Advantages over competitors – these guys are military (I also like the fact that they utilise real weaponry)

·        Excellent culture within the dev team

·        XR is/was (now exceeding?) as profitable as the entertainment leg

I am impressed with Wayne and his strategic and clinical approach to planned growth. I also really appreciated what I felt was an honest conversation about the business. The only potential issue I currently have is the sale of FREAK and iFly, and the debt levels. It was being discussed back during this meeting at the start of 2025. It’s currently mid 2026 and there still hasn’t been a sale. I have seen that Wayne featured on The Briefing Room podcast last month, so I have added that to my listen list for tomorrow to see if any more has been said on where this is at.

I'm just getting my thoughts down on paper (well, the screen?) as I look into this. It's mostly for reflection in the future, but I suppose I'm also interested to hear others thoughts on XRG. Thanks to @Strawman for initially meeting with Wayne last year, to @Tom73, @Wini and others that have done deep dives into XRG thus far and brought it onto my radar.

p.s. CEO and COO have enough skin in the game too, roughly 4-6x their salary. Would be good to see others buying.