Increased Demand and Interest for lighting Systems Arizona Facility Expected to Become Revenue Generating in Early 2019

CARSON, Calif., Nov. 13, 2018 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- Generation Alpha, Inc. (OTCQB: GNAL) (“Generation Alpha”), a vertically integrated cannabis technology innovator, manufacturer and distributor, today announced its operating results for the three and nine months ended September 30, 2018.

Nine Months Ended September 30, 2018 Financial Highlights:

  • Lighting and nutrient revenue of $2.6 million; and
  • Cash balance of $2.1 million.

Third Quarter 2018 Business Highlights:

  • Changed corporate name to Generation Alpha and trading symbol to GNAL;
  • Appointed Peter Najarian and Tiffany Davis to Board of Directors;
  • Launched Perfect pH, a natural ION pH balancer;
  • Introduced Solis Tek B9 LED, a high efficiency LED lighting system; and
  • Made substantial progress at Arizona facility, which is expected to commence processing revenue in early 2019.

Generation Alpha Chief Executive Officer, Alan Lien, commented, “We are happy with the progress being made at our 70,000 square foot Arizona facility. With manufacturing targeted to commence in early 2019, we are excited to soon move into the revenue generation stage.  Beyond Arizona, we have plans to be operational in several legalized U.S. states. We have identified many exciting opportunities in additional jurisdictions and are currently performing ongoing due diligence and discussions with several parties.” Lien continued, “While our lighting business has seen a significant decrease this year, we are beginning to see an increase in demand for our lighting and nutrient products as the industry begins to stabilize and additional legalized states come on board.”

Revenue for the nine months ended September 30, 2018 and 2017 was $2,565,085 and $7,336,980, respectively, a decrease of $4,771,895, or 65%. The decrease was due to several negative factors during the first nine months of 2018, as compared to the prior year period. Such factors include, market instability and uncertainty, reports of over-capacity and price declines in the wholesale market. The current Administration’s stance on marijuana enforcement, particularly the rescinding of the Cole Memorandum and giving the Federal U.S. Attorneys “free-reign” as to enforcement priorities set a very negative tone and caused hesitation from buyers in the cannabis industry. Industry-wide build-outs slowed and were delayed. Additionally, recreational states have introduced new requirements for testing, oversight, and tightening of the regulatory environment, which has caused a pause in the expansion timetable of many new licensees.

About Generation Alpha, Inc.

Generation Alpha, Inc. focuses 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 Generation Alpha’s lighting solutions to increase yield, lower costs and grow better to maximize their return on investment. Generation Alpha’s customers include retail stores, distributors, ecommerce, and commercial growers. In 2018, Generation Alpha expanded into the “touch-the-plant” side of the cannabis business under a contract with an Arizona licensee and its ongoing build-out of a cultivation and processing facility in Phoenix, AZ. For more information, please visit our website, www.genalphainc.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 Generation Alpha’s current plans and expectations, as well as future results of operations and financial condition. Generation Alpha undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Investors Contact:
Hayden IR
917-658-7878
hart@haydenir.com   


GENERATION ALPHA, INC.
(FORMERLY SOLIS TEK INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS

  September 30,
2018
  December 31,
2017
 
  (Unaudited)     
ASSETS        
Current Assets        
Cash $2,053,399  $967,943 
Accounts receivable, net of allowance for doubtful
accounts and returns of $22,288 and $396,499,
respectively
  296,803   417,484 
Inventories, net  1,157,373   1,684,463 
Advances to suppliers – formerly a related party  540,090   735,730 
Prepaid expenses and other current assets  247,323   134,374 
Total Current Assets  4,294,988   3,939,994 
         
Property and equipment, net  509,969   138,243 
Intangible assets acquired from related party, net  1,382,941   - 
Other assets  83,887   37,980 
TOTAL ASSETS $6,271,785  $4,116,217 
         
LIABILITIES AND SHAREHOLDERS’ DEFICIT        
Current Liabilities        
Accounts payable and accrued expenses $1,839,820  $1,124,349 
Due to former related party vendor  -   381,457 
Contract obligations, current portion  331,818   - 
Note payable - related parties  640,000   1,145,000 
Note payable to related party, current portion, net of
discount of $747,032 and $0, respectively
  752,968   - 
Convertible note payable to related party, current
portion, net of discount of $0 and $1,055,556,
respectively
  -   194,444 
Due to related parties  124,117   146,534 
Capital lease obligations, current portion  260   9,665 
Loans payable, current portion  3,383   8,476 
Total Current Liabilities  3,692,366   3,009,925 
         
Loans payable, net of current portion  -   17,481 
Contract obligations, net of current portion  445,295   - 
Convertible note payable, net of current portion, net of
discount of $0 and $500,000, respectively
  -   - 
Derivative liability  6,617,284   7,415,000 
Total liabilities  10,754,945   10,442,406 
         
Series-A Convertible Preferred Shares, net of no
discount and $351,000, no par value, none and 351,000
shares issued and outstanding at September 30, 2018
and December 31, 2017, respectively
  -   - 
         
Commitments and Contingencies        
         
Shareholders’ Deficit        
Preferred stock, no par value, 20,000,000 shares
authorized; no shares issued and outstanding at
September 30, 2018 and December 31, 2017
  -   - 
Common stock, $0.001 par value, 100,000,000 shares
authorized; 45,066,564 and 38,522,034 shares issued
and outstanding at September 30, 2018 and December
31, 2017, respectively
  45,067   38,522 
Additional paid-in-capital  28,459,378   9,077,690 
Accumulated deficit  (32,987,605)  (15,442,401)
Total Shareholders’ Deficit  (4,483,160)  (6,326,189)
         
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT $6,271,785  $4,116,217 



GENERATION ALPHA, INC.
(FORMERLY SOLIS TEK INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2018  2017  2018  2017 
             
       
Sales $851,710  $1,993,865  $2,565,085  $7,336,980 
Cost of goods sold (1)  718,139   1,322,497   1,836,980   4,625,210 
Gross profit  133,571   671,368   728,105   2,711,770 
                 
Operating expenses                
Selling, general and administrative
expenses
  4,115,603   2,050,189   10,213,893   9,206,076 
Research and development  37,332   82,500   151,916   247,770 
Excess cost of acquisition from a related
party over historical basis
  -   -   4,450,000   - 
Total operating expenses  4,152,935   2,132,689   14,815,809   9,453,846 
                 
Loss from operations  (4,019,364)  (1,461,321)  (14,087,704)  (6,742,076)
                 
Other income (expenses)                
Financing costs (2)  -   -   (7,317,406)  - 
Change in fair value of derivative liability  (2,525,234)  -   4,286,692   - 
Gain on extinguishment of derivative
liability
  -   -   2,389,427   - 
Interest expense (3)  (548,632)  (28,190)  (2,813,013)  (84,010)
Total other expenses  (3,073,866)  (28,190)  (3,454,300)  (84,010)
                 
Loss before income taxes  (7,093,230)  (1,489,511)  (17,542,004)  (6,826,086)
                 
Provision for income taxes  -   -   3,200   4,113 
                 
Net loss $(7,093,230) $(1,489,511) $(17,545,204) $(6,830,199)
                 
BASIC AND DILUTED LOSS PER SHARE $(0.17) $(0.04) $(0.42) $(0.18)
                 
WEIGHTED - AVERAGE COMMON SHARES
OUTSTANDING BASIC AND DILUTED
  42,826,985   37,079,972   41,810,624   37,482,508 
                 
(1) Included in cost of goods sold are these
amounts from a former related party
 $137,080  $977,784  $549,802  $3,607,090 
(2) Included in financing costs are these
amounts from a related party
  -   -   6,177,406   - 
(3) Included in interest expense are these
amounts from related parties
 $16,868  $45,205  $39,781  $81,986