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Solis Tek Inc. Announces Third Quarter and Nine Month 2017 Financial Results

/EINPresswire.com/ -- CARSON, CA--(Marketwired - November 14, 2017) - Solis Tek Inc. (OTCQB: SLTK), a vertically integrated technology innovator, developer, manufacturer and distributor focused on bringing products and solutions to commercial cannabis growers in legal markets across the U.S., today reported financial results for the quarter and nine month period ended September 30, 2017.

Financial Update

  • Third Quarter 2017 revenues of $1.99 million; up 6% over the same period in 2016
  • Revenues of $7.34 million for the first nine months of 2017; up 11.4% over the same period in 2016
  • Third Quarter 2017 gross profit of $671 thousand; up 5% over the same period in 2016
  • Gross profit of $2.71 million for the first nine months of 2017; up 14.5% over the same period in 2016

Business Update

  • Successful launch of proprietary Digital Lighting Controller to unprecedented market response and demand
  • Testing initialized for second Zelda Horticulture, Inc. nutrient product
  • Independent, third party test of six lighting companies scored Solis Tek's Digital Lighting solution highest in terms of overall efficiency and value for cultivators

Subsequent Event

  • In November, 2017, Solis Tek closed on a financing that provided $2.5 million in new capital to support supply chain fulfillment and nutrient line automation

"We've significantly expanded our product portfolio in the third quarter and the increased demand for our products has continued," commented Dennis G. Forchic, Chief Executive Officer of Solis Tek. "We are particularly excited about the response to our new Digital Lighting Controller. This device complements our existing upgraded product line and enables cultivators to schedule and monitor their grow rooms, thus increasing the grower's yield and ROI. Initial demand for the Controller exceeded expectations. With the recent funding round now complete we are excited to be able to increase inventory levels across the board to meet projected demands."

Mr. Forchic continued, "With the successful completion of our recently announced financing transaction that resulted in more than $2 million in capital, Solis Tek is well positioned to realize sustained supply chain execution, thus maintaining healthy inventory levels of key products across our product portfolio to support continued revenue growth. We also plan to use the proceeds from this financing to automate production of our Nutrient Line, which is rapidly moving towards introducing its second commercial product. We remain excited by the demand trends we are seeing across both our lighting and nutrient units, which will leverage the same distribution-supply channels and client base, spearheading our planned drive toward significant revenue growth and expanded margins for Solis Tek. We see tremendous opportunity for Solis Tek as we position the Company for dynamic growth in 2018 and beyond."

Financial Results for the Quarter Ended September 30, 2017

For the third quarter of 2017, revenues were $1.99 million, representing a 6% increase over the same period in 2016. These increases were driven by increased market penetration among hydroponic customers and commercial facilities. Cost of revenues increased 7% over the same period in 2016, modestly lowering gross margin to 33.7%, compared with 34.1% for the same period in 2016.

Selling, general, and administrative expenses were $2.05 million in the third quarter of 2017, up 167% over the same period in 2016, due primarily to cash and stock-based compensation expenses to support a broad campaign to increase Solis Tek's industry and investment community visibility and, to a lesser extent, increased marketing and payroll related expenses.

Stock compensation expense was $556,000 for the third quarter of 2017, compared with $25,000 in the same period in 2016. Research and development expenses were $82,500, 42% higher than the same period in 2016.

Net loss for the third quarter of 2017 was $1.49 million, or $0.04 per share, compared with a net loss of $173,460, or $0.01 per share for the same period in 2016, again due primarily to cash and stock-based compensation expenses.

As of September 30, 2017, the Company had $194,000 in cash, compared with $276,000 at December 31, 2016.

Financial Results for the Nine Month Period Ended September 30, 2017

For the nine months ended September 30, 2017, revenues were $7.34 million, representing an 11.4% increase over the same period in 2016. These increases were driven by increased market penetration among hydroponic customers and commercial facilities. Cost of revenues increased 9.6% over the same period in 2016, resulting in gross margin of 37%, up from 35.9% for the same period in 2016.

Selling, general, and administrative expenses were $9.21 million in the nine months ended September 30, 2017, up 303% over the same period in 2016, due primarily to cash and stock-based compensation expenses to support a broad campaign to increase Solis Tek's industry and investment community visibility and, to a lesser extent, increased marketing and payroll related expenses.

Stock compensation expense was $5,361,046 for the nine months ended September 30, 2017, compared with $86,000 in the same period in 2016. Research and development expenses were $247,770 in the nine months ended September 30, 2017, 44% higher than the same period in 2016.

Net loss for the nine months ended September 30, 2017 was $6.83 million, or $0.18 per share, compared with a net loss of $163,657, or $0.01 per share for the same period in 2016, again due primarily to cash and stock-based compensation expenses.

To be added to the Solis Tek email distribution list, please email SLTK@kcsa.com with SLTK in the subject line.

About Solis Tek

Solis Tek is a vertically integrated technology innovator, developer, manufacturer and distributor focused on bringing products and solutions to commercial cannabis growers in both the medical and recreational space in legal markets across the U.S. For nearly a decade, growers have used Solis Tek's lighting solutions to increase yield, lower costs and grow better to maximize their return on investment. The Company's customers include retail stores, distributors and commercial growers in the United States and abroad. For more information, please visit our website, www.solis-tek.com.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of uncertainties and risks that could significantly affect the Company's current plans and expectations, as well as future results of operations and financial condition. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

 
Solis Tek Inc.
Condensed Consolidated Balance Sheets
         
    September 30,
2017
  December 31,
2016
    (Unaudited)    
ASSETS        
CURRENT ASSETS                
Cash   $ 194,129     $ 275,783  
Accounts Receivable, net of allowance for doubtful accounts of $381,937 and $359,395     865,429       628,691  
Inventories     1,769,638       2,880,804  
Prepaid expenses and other current assets     229,004       75,109  
Total current assets     3,058,200       3,860,387  
                 
Property and equipment, net     155,025       204,936  
Other assets     37,154       32,071  
TOTAL ASSETS   $ 3,250,379     $ 4,097,394  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
CURRENT LIABILITIES                
Accounts payable and accrued expenses   $ 939,628     $ 552,057  
Due to related party vendor     398,656       1,083,764  
Note payable - related parties     545,000       265,000  
Amount due to related parties     160,153       134,086  
Capital lease obligations, current portion     12,871       13,711  
Loans payable, current portion     7,914       8,262  
Total Current Liabilities     2,064,222       2,056,880  
                 
Capital lease obligations, net of current portion     260       9,665  
Loans payable, net of current portion     20,159       25,958  
Notes payable related parties, net of current portion     600,000       600,000  
Total liabilities     2,684,641       2,692,503  
                 
Commitments and contingencies                
Shareholders' Equity                
Preferred stock, no par value, 20,000,000 shares authorized; no shares issued and outstanding     -       -  
Common stock, $0.001 par value, 100,000,000 shares authorized; 37,959,534 and 29,721,998 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively     37,959       29,722  
Additional paid-in-capital     8,778,651       2,795,842  
Accumulated deficit     (8,250,872 )     (1,420,673 )
Total Shareholders' Equity     565,738       1,404,891  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 3,250,379     $ 4,097,394  
                 
   
Solis Tek Inc.
Condensed Consolidated Statements of Operations
 
   
    Three months ended
September 30,
    Nine months ended
September 30,
 
    2017     2016     2017     2016  
    (Unaudited)     (Unaudited)  
Sales   $ 1,993,865     $ 1,877,000     $ 7,336,980     $ 6,587,498  
Cost of goods sold (1)     1,322,497       1,236,536       4,625,210       4,219,412  
Gross profit     671,368       640,464       2,711,770       2,368,086  
                                 
Operating expenses                                
  Selling, general and administrative expenses     2,050,189       767,239       9,206,076       2,286,464  
  Research and development     82,500       57,500       247,770       172,500  
Total operating expenses     2,132,689       824,739       9,453,846       2,458,964  
                                 
Loss from operations     (1,461,321 )     (184,275 )     (6,742,076 )     (90,878 )
                                 
Interest expense, net of interest income     (28,190 )     (26,885 )     (84,010 )     (77,279 )
Interest income     -       -       -       4,500  
Loss before income taxes     (1,489,511 )     (211,160 )     (6,826,086 )     (163,657 )
                                 
Provision (benefit) for income taxes     -       (37,700 )     4,113       -  
                                 
NET LOSS   $ (1,489,511 )   $ (173,460 )   $ (6,830,199 )   $ (163,657 )
                                 
BASIC AND DILUTED LOSS PER SHARE   $ (0.04 )   $ (0.01 )   $ (0.18 )   $ (0.01 )
                                 
WEIGHTED - AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED     37,079,972       29,659,498       37,482,508       29,623,868  
                                 
(1) Included in cost of goods from related party   $ 977,784     $ 723,387     $ 3,607,090     $ 3,309,941  
                                 

Investor Relations Contact:
Phil Carlson / Elizabeth Barker
KCSA Strategic Communications
SLTK@kcsa.com

Communications Contact:

Danielle DeVoren
KCSA Strategic Communications
212-896-1272
SolistekKCSA@kcsa.com

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