Solis Tek Inc. Announces Financial Results for First Quarter of 2017
Marketwired
CARSON, CA--(Marketwired - May 08, 2017) - Solis Tek Inc. (SLTK), a leading provider of digital lighting equipment for hydroponic cannabis cultivation, reported record revenues for the quarter ended March 31, 2017 of $2,901,826 compared to revenue of $2,584,668 in the first quarter of 2016. This represents a 12% increase in revenue year-over-year. Gross profit for the quarter ended March 31, 2017 and 2016, was $1,120,522 and $925,957, respectively. The gross profit increase of $194,565, or 21%, was primarily due to an increase in revenue and continued focus on internal efficiencies.
Business and Financial Summary for Q1 2017
Company had revenues of $2,901,826 for Q1 2017; up 12% from first quarter of 2016;
Net loss of $3,751,987 for Q1 2017 due to significant non-cash costs of $3,663,154;
SG&A expenses increased $4,010,961 to $4,764,655 due to a one-time stock compensation expense of $3,638,154;
Gross Profit of $1,120,522 for first quarter of 2017; up 21% from same period in 2016;
Gross Margins increased to 38.6% in 2017 up from 35.8% in the first quarter of 2016;
Cash balances increased 50.4% since December 31, 2016;
Non-GAAP Adjusted EBITDA loss of $(46,004);
Dennis G. Forchic named Chief Executive Officer;
Co-Founder Alan Lien named Chairman of Board, in addition to his prior roles of President and Chief Financial Officer
Dennis G. Forchic, Chief Executive Officer of Solis Tek commented, "In the first quarter of 2017, we delivered record top line revenue and significantly improved gross margins. Our strong revenue performance drove record gross profit for Solis Tek and although net income was negative according to GAAP, on a Non-GAAP adjusted basis we were almost break-even for the quarter." He further stated, "As a company focused on providing products and solutions to commercial and non-commercial cannabis cultivators, we are uniquely positioned to capitalize on the rapid growth of the cannabis market. Solis Tek is a strong nationally recognized brand in lighting for the cannabis industry and has established itself as a supplier of lighting to top growers for nearly a decade. Our first quarter of 2017 was highlighted by a number of new clients acquiring our digital lighting products as well as a number of significant expansion projects from our existing customers. I believe Solis Tek is poised to continue to build market share within the cannabis industry and I am excited to have joined the Company at an inflection point in its growth and path towards maximizing its potential."
The Company reported selling, general and administrative ("SG&A") expenses for the first quarter of 2017 of $4,764,655 compared to $753,694 during the same period in 2016, an increase of $4,010,961 or 532%. The increase in SG&A expense was primarily due to increases in stock compensation costs, payroll, and marketing to support the increase in revenues and increase in bad debt expense. Stock compensation expense for the first quarter of 2017 was $3,638,154 compared to $36,000 for the same period in 2016.
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 digital lighting solutions to increase yield and lower costs 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
March 31,2017
December 31, 2016
(Unaudited)
ASSETS
CURRENT ASSETS
Cash
$
414,937
$
275,783
Accounts Receivable, net of allowance for doubtful accounts of $411,822 and $359,395
1,286,373
628,691
Inventories
2,014,820
2,880,804
Advances to suppliers
192,857
-
Prepaid expenses and other current assets
77,363
75,109
Total current assets
3,986,350
3,860,387
Property and equipment, net
190,391
204,936
Other assets
32,072
32,071
TOTAL ASSETS
$
4,208,813
$
4,097,394
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses
$
735,519
$
552,057
Due to related party vendor
422,526
1,083,764
Note payable - related parties
545,000
265,000
Amount due to related parties
137,508
134,086
Capital lease obligations, current portion
11,919
13,711
Loans payable, current portion
8,161
8,262
Total Current Liabilities
1,860,633
2,056,880
Capital lease obligations, net of current portion
8,102
9,665
Loans payable, net of current portion
24,020
25,958
Notes payable related parties, net of current portion
600,000
600,000
Total liabilities
2,492,755
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; 36,593,077 and 29,721,998 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively
3,660
2,972
Additional paid-in-capital
6,885,058
2,822,592
Accumulated deficit
(5,172,660)
(1,420,673)
Total Shareholders' Equity
1,716,058
1,404,891
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
4,208,813
$
4,097,394
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Solis Tek Inc.
Condensed Consolidated Statements of Operations
Three months ended March 31,
2017
2016
(Unaudited)
Sales
$
2,901,826
$
2,584,668
Cost of goods sold (including $1,465,996 and $1,366,622 from related party)
1,781,304
1,658,711
Gross profit
1,120,522
925,957
Operating expenses
Selling, general and administrative expenses
4,764,655
753,694
Research and development
82,770
57,000
Total operating expenses
4,847,425
810,694
Loss from operations
(3,726,903)
115,263
Interest expense
(24,171)
(26,774)
Loss before income taxes
(3,751,074)
88,489
Provision for income taxes
913
43,529
NET INCOME (LOSS)
$
(3,751,987)
$
44,960
BASIC AND DILUTED LOSS PER SHARE
$
(0.10)
$
0.00
WEIGHTED - AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED
36,388,724
29,594,800
Non-GAAP Measure - Adjusted EBITDA
In addition to our GAAP results, we present Adjusted EBITDA as a supplemental measure of our performance. However, Adjusted EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of liquidity. We define Adjusted EBITDA as net income (loss), plus interest expense, provision for income taxes, depreciation and amortization, and stock-based compensation. Non-GAAP adjustments to our results prepared in accordance with GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
Below is a reconciliation of Adjusted EBITDA to net income (loss) for the three months ended March 31, 2017 and 2016.
