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Are these all for the Cincy area? How has your earlier unit been doing?
Have to wait and see, but they installed 50 or so in November and are on track to do the same in December. I'm not too concerned about getting to 150/month early in 2019 but am somewhat skeptical about 300/month later in the year.
Anytime you invest in a startup you need to be prepared for hiccups - it's just reality. VEND is still on the road to success, just a bumpy one as opposed to a smooth one.
Bumps can cause disappointment but that's different than disillusionment. I'm disappointed in the rate of progress but not disillusioned about the potential.
JMHO
Disappointed is more appropriate than 'not impressed'. Based on what I had understood recently, I expected installed machines to be near 300 by year end, not 187. I understand need to correct and improve, but that has been going on for 6 months with the promise of increased deliveries 'soon'.
Combination of increased shares outstanding and decreased installations has really hit the share price. Appears recovery will be slow heading into 2019 depending on how many new shares are issued to raise needed cash and whether they actually go to 150 installations per month beginning in January.
Holding but disappointed....
Generation Next Franchise Brands Shareholder Update
BY GlobeNewswire
— 7:44 AM ET 12/10/2018
SAN DIEGO, Dec. 10, 2018 (GLOBE NEWSWIRE) --
Dear Shareholder,
Thank you for your continued support in Generation Next Franchise Brands ( VEND) . I apologize for not being able to present this in person today. I was asked last minute to present our concept and technology to a national retail chain we are very excited to work with in placing our robotic vending kiosks. I could not ignore the importance of this opportunity.
Throughout 2018, we have continued to grow Reis & Irvy’s domestically and internationally. In the background, we have been working tirelessly with our partners at Flex, Rethink Motion, Hartfiel, Stoelting, EPMP and E2C Communications to refine and improve our patented robotic vending technology.
Before introducing briefly what I believe is an exciting opportunity for our franchisees and investors to generate a passive-income dividend opportunity, I would like to begin by addressing:
Why the company slowed production after identifying sporadically-occurring technically issues observed in Alpha Production Units;
The measures taken to remedy the technical issues observed; and
How the company intends to ramp up production moving forward as we get back on track.
To date, we have installed 137 Alpha Production Units. We have an additional 25 “Gen 2” production units equipped with significant hardware and software upgrades scheduled for installation in the next week. We expect production of an additional 50 kiosks and 25 installations by month-end. Additionally, we are projecting approximately 187 units installed by calendar year end.
Upon identifying a set of sporadically occurring set of technical issues, we slowed production. Our team, along with our partners have worked around-the-clock to resolve all issues identified. 50 Alpha production units have already been fitted with a hardware and software “retrofit” upgrade and the remaining units are in process of being upgraded.
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Production Volume
Our latest production schedule from a single line set up with our manufacturing partner projects an average of 150 kiosks per month through the first few months of 2019. It allows our teams to continue working on improvements while we maintain a more conservative and lean build schedule that is focused 100% on quality. An increased schedule based on the addition of a second production line is our number one priority and we believe this can happen in early 2019.
www.reisandirvys.com has recently been updated to focus on the consumer, not the franchisee prospect. We are also in the process of completing two new Reis & Irvy’s TV commercials focusing on both the consumer, and prospective franchisee that will be live and ready to launch in January 2019.
Finally, the company is entertaining the concept of a new investment vehicle similar to that of a Real Estate Investment Trust [REIT] (or in our case a Robot Investment Trust [RIT]) allowing franchisees and qualified investors a passive income opportunity with our robots doing all of the hard work. Under the proposed plan, VEND will build, secure locations, deliver, install, service and maintain kiosks via the help of our partner, CSA Solutions www.csa-service.com. Dannon www.yocream.com has already agreed to distribute and promote our brand and their consumable nationwide. Franchisees and qualified investors that transfer into this vehicle will be offered distributions based on the total revenue generated minus Generation Next’s 12% of gross revenue and costs of consumables and service. We have surveyed all of our franchisees and have received an incredibly positive response to this. We will continue researching this opportunity and intend to update interested qualified investors and our shareholder base in the coming weeks.
over 83,500 shares bought during the last 45 minutes of trading (200 shares sold)
Seems someone believes good news coming at the Monday shareholder meeting.....which will be after the close of the market
Pretium Resources Inc.: Exploration and Resource Drilling Update
VANCOUVER, British Columbia, Dec. 06, 2018 (GLOBE NEWSWIRE) -- Pretium Resources Inc. (TSX/NYSE:PVG) (“Pretivm” or the “Company”) is pleased to provide an update on the progress from the 2018 exploration activities at the Valley of the Kings and the Bowser Claims along with plans for 2019.
2018 Regional Grass-roots Exploration Results
Results of the 8,000-meter regional exploration drill program conducted on the Bowser Claims confirm the presence of Brucejack style high-grade gold mineralization hosted in broad zones of low-grade stockwork, highlighting the potential for discovery of porphyry-related copper-gold mineralization and high-level epithermal mineralization on the property (see Table 1 below for select assays). Additional drilling is being planned to further evaluate these targets in 2019.
The wholly-owned, approximately 1,200-square-kilometer Bowser Claims, located east of the Brucejack Mine, include the American Creek, Bluffy, and Koopa Zones, along with the newly discovered Upper Kirkham Zone. A summary of results by zones follows. For a plan view of the 2018 program please see the following link: http://resource.globenewswire.com/Resource/Download/1163ad22-0e19-4143-83a7-23c2590750fa.
American Creek Zone
Several gold and silver epithermal targets were tested in the American Creek Zone, located approximately 25 kilometers southeast of the Brucejack Mine. Drilling successfully intersected broad zones of low-grade mineralization at the north end of the American Creek Zone (Lillianne showing) and an upper expression of a polymetallic epithermal vein system near the center of the American Creek Zone (Virginia K showing). At the south end of the American Creek Zone (Outlaw showing), vein-hosted copper mineralization was intersected which is interpreted as the upper expression of a porphyry system. A review of the strong alteration and metal zonation intersected in drill core will be conducted over the winter to focus future drilling on the higher grade segments of these mineralization systems.
Selected drill highlights from the American Creek Zone include:
Hole BR-001 intersected 1.82 grams per tonne gold over 6.60 meters, including 9.19 grams per tonne gold and 196.00 grams per tonne silver over 0.74 meters.
Hole BR-003 intersected 10.15 grams per tonne gold over 1.50 meters.
Hole BR-007 intersected 0.47 grams per tonne gold over 10.70 meters, including 3.16 grams per tonne gold over 1.00 meters.
Hole BR-016 intersected 41.54 grams per tonne silver, 0.56% lead and 2.12% zinc over 25.50 meters, including 230.00 grams per tonne silver, 1.00% lead and 7.55% zinc over 1.50 meters.
Bluffy Zone
The Bluffy Zone, located 30 kilometers south-southeast of the Brucejack Mine hosts disseminated sulphide mineralization in the Unuk River Formation of the Lower Hazelton Group, which also hosts the Valley of the Kings deposit. Drilling intersected broad zones of low-grade gold hosted in shear zones, which contain narrow veins of high grade gold and base metal values. This drilling has confirmed that a substantial mineral system was active at Bluffy and additional work is being planned to further delineate the higher grade mineralization.
Koopa Zone
The Koopa Zone, located approximately 30 kilometers east-southeast of the Brucejack Mine, is dominated by intensely quartz-sericite pyrite altered Salmon River Formation volcanics and Quock Formation sediments of the Upper Hazelton Group, which also hosts the Eskay Creek deposit. At Koopa, a structurally controlled epithermal system appears to be overprinting a VMS style alteration system. The stratigraphy, alteration, and broad halo of pathfinder elements are indicative of a potentially large mineralization system. Follow-up drilling in the Koopa Zone is planned in 2019.
Upper Kirkham Zone
The 2018 prospecting program successfully resulted in the discovery of the Upper Kirkham Zone, located four kilometers southwest of the Bowser Camp. Epithermal-style polymetallic veins with strong quartz-sericite pyrite alteration halos were intersected in an area recently exposed by the receding glacier. Prospecting samples collected across the Upper Kirkham Zone returned assays as high as 3.55 grams per tonne of gold, greater than 10,000 grams per tonne of silver, 4.71% copper, greater than 20% lead and 3.81% zinc. Follow-up drilling as well as additional prospecting is planned to resume in 2019.
2019 Regional Exploration
The regional exploration campaign was initiated in 2016 to identify mineralized zones similar to the Valley of the Kings and Eskay Creek deposits. In 2019, this work will continue with additional drilling planned in the areas tested this year, and continued expansion of the regional prospecting and mapping programs, with an emphasis on continued identification of Eskay Creek style VMS mineralization in the preserved Salmon River formation, and epithermal and porphyry related gold mineralization in the deeper parts of the stratigraphy. The comprehensive regional exploration program has included the collection of over 13,000 samples, regional mapping, prospecting, airborne geophysics, ground geophysics, hyperspectral mapping, and data compilation.
2019 Underground Exploration Drilling for Porphyry Source
Over the summer, a surface geophysical program was conducted to follow-up on the successful underground exploration drilling that demonstrated mineralization continuity between the Valley of the Kings and the Flow Dome Zone, an area approximately 1,000 meters east of the Brucejack Mine (see news release dated June 18, 2018). Two drill holes, both over 1,500-meters in length, drilled east from the Valley of the Kings intersected Brucejack-style mineralization throughout. In addition, the drilling intersected anomalous copper and molybdenum mineralization, which coupled with mineralogical indicators, suggest proximity to porphyry-style mineralization at depth.
Results from the follow-up geophysical program which included downhole and surface IP and reflection seismic surveys, are currently being processed. Mineral chemistry evaluation for porphyry vectoring and geochronology of porphyritic material at depth is currently underway. The drill results, along with the geophysics and mineral chemistry, will be integrated to refine targeting of this zone for subsequent drilling. Preliminary plans are to drill three to four targeted holes to further test the porphyry potential below the Flow Dome Zone.
Valley of the Kings Resource Definition and Expansion Drilling
Zones at depth, to the east, west and north-east of the Valley of the Kings resource will be drilled as part of an approximately 70,000 meter drill program planned for 2019. The purpose of the drilling is to expand the current mineral resource and reserve to the east and at depth and to improve resource definition ahead of mining.
The area to the north-east of the currently defined mineral resource is considered highly prospective for additional resource expansion. A re-interpretation of previous drill results indicates the presence of a repetition, through faulting, of the key stratigraphy that hosts high-grade gold mineralization in the Valley of the Kings.
From the Research Report:
"Flex “promised” to deliver an on-going run-rate of 200 machines per month starting late summer....But then a series of problems from machine malfunctions to a little weather disturbance, called Hurricane Florence, striking essentially the area where Flex has one of its major vending machine production facilities again pushing out deliveries. The good news is that starting at the end of September and seemingly into the current quarter Flex is up and running and the problems of design and engineering as well as current problem weather patterns are finally behind them.....I think we start seeing the delivery and installation of more new units with every passing month and the start of a remarkable “hockey stick” ramp in revenue, and a dramatic drop in the company’s operating losses, starting with the current quarter fourth calendar (second fiscal quarter) of 2019.... Flex has promised, promised, promised to accomplish what they have set out to do and start delivering the fully functional, robot servicing vending machines. We know that they can do just that....Based on a moderate ramp of 200 per month of unit production and installations this year and the doubling of delivered and installed kiosks to 400 per month during next year, it provides the operating framework for revenues to approach the $60 million level for fiscal 2019 and our projection for 2020 is a revenue rate of nearly $180 million. There is every reason to assume the shares should surpass their $2.78, 52-week high and crest near the upper single digit level during the next two years."
A Research Report by Marc Robbins, CFA
A relatively long read but also available at:
[url]https://docs.wixstatic.com/ugd/43167a_486f491930c0408e90b55bf0a3eea2bc.pdf
[/url][tag]RESEARCH_REPORT[/tag]
The following is from the above link with a correction in the final paragraph where the stock price has a decimal inserted.
Generation Next Brands, Inc.
Revenge of Reis & Irvy I love ice cream, sorbet, or soft serve and when I heard a radio ad that a new, robotic kiosk that automatically served completed, frozen sundae treats, I gained another five pounds just thinking about it. Yes, Generation Next is the creation of a very skinny looking Aussie, who appears to have never gone close to a snow cone or fudgsicle. On the other hand, his Reis & Irvy self-contained frozen treat vending machines look to be absolutely a winning answer for those searching for something quick to eat that is neither a candy, snack nor soda. For those who can tolerate substantial price volatility and also understand the risk and trials of forming any new business, VEND represents a new food distribution concept--no “trend”-- that promises a wild and fast-paced and lucrative ride. The reasons for my opinion include…. The share price is substantially below it earlier highs and represents a much better entre’ point. There is a backlog of ordered Reis & Irvy machines that now that the manufacturer can produce the kiosks, should cause a tsunami of orders being filled. There are multiple ways that the business can generate profits: We should start seeing some startling shifts as costs are being covered by first, profits being generated by the sale and order completions of kiosk sales and second, by royalty and fee payments made by the franchisee/operators.
Vend—Schmend The one true benefit about being an analyst/manager for as long as I have is that I’ve seen just about every kind of business there is. Many that no longer exist because of being bought out. Some whose industries don’t even exist anymore. Many more for the good versus being unsuccessful. One area where the good ones and bad ones are about even is the vending industry. My long-ago favorite has to be TRM Copy Centers. You know the business. Just about every speedy market, corner grocery story, and most drug stores and hardware stores had one of their very simple, black & white copy machines where a customer could ring-up 5? copies for black and white Xerox replications and $0.43 for color copies. I even liked the stock symbol—TRMM, which according to the CEO/Founder stood for “The Real Money Machine”
That said, I mention the vending business today and many of my investor friends turn-away, get suddenly ill or grudgingly come to an introductory meet-&-greet luncheon to help me out or for the free fish lunch. Vending machines….those went out with the discovery that cigarettes caused cancer and the coffee dispensing machine used as a prop in Terminator II with the poker-hand cups…are actually everywhere and make up a fairly substantial role in the course of living of our daily lives.
Then I mention frozen yogurt and ice cream. That seems to blunt the naked opposition.
Then I mention that Professional Golfer, Phil Mickelson, recently licensed the San Diego metropolitan market for the Generation Next vending machine concept. They stop in their tracks and start to listen.
Then I ask my friends to consider the tens of thousands of university dorms, hospital cafeterias, convenience stores, airport facilities or office building basements that have a mere 15 square feet of spare space and an electrical plug necessary to accommodate the machines. Zillions! Now, think about how many $5.00 servings of ice cream, yogurt, sorbets or soft-serves with fruit or chocolate sauce toppings and candy sprinkles could be served in a the 24-hour period. I’d bet that just having these machines on campus at Brigham Young University and the University of Utah could practically make VEND a success alone! Given the actual number of viable locations, this vending business idea could break into the hundreds-of-thousands of kiosks spreading sweetness & lite with Reis & Irvy. That is Generation Next Franchise Brands, Inc.
Nick Yates, an Australian with a family heritage involved in vending machines and coin games, is the 21st century Pin-Ball Wizard. Although still a young man, he fell in love and handled his first vending game when he was 19 years-old. He now imagines the world populated with robotic service machines not just doling-out frozen yogurt and soft-serve but a variety of fresh, imaginative, tasty snacks that Americans (and others) just can’t seem to do without. Several years ago, Yates—inspired by Michelle Obama--had this great idea to vend healthy, fresh snacks and lunch items in schools and hang-outs to help replace the junk food and sodas that are the culinary norm with youths and teens. The idea of combining robotics, fresh food/ snacks, modern manufacturing and multiple outlet locations--much like RedBox and CoinStar with DVD movies and coin counting—made dollars and cents to Yates.
Unfortunately, the wizard had only moderate success helping to forward Mrs. Obama’s healthy food beliefs (fresh Brussel Sprouts, arugula, quinoa and parsnips didn’t go very far with the youth crowd like it did with their parents). But, this disappointment didn’t slow Yates down or divert him from his mission. After years of designing, re-building, re-engineering, patenting and pulling together operating partners to make the whole operation work, Yates has now produced what appears to be a major, ”new” retailing concept breakthrough… What do practically children of all ages like and would eat more of if it was conveniently available? Frozen Yogurt, Soft-serve Ice cream, Sorbet and Gelato! I know very FEW kids that don’t like ice cream or one of the near substitutes.
Reis & Irvy’s Robots To The Rescue Get a load about how this new vending machine works and the way the accompanying distribution process covers all the bases….. The Generation Next Robotic Vending machine is:
? Designed and built to dispense one 5 oz. or 7 oz. serving of yogurt or ice cream;
? Delivers seven flavors of cold dessert (now), a few choices of topping sauces, and a variety of sprinkles and candies as a dessert garnish for each serving;
? Small in actual size taking up just 15 square feet of floor space and only needing an electrical plug….all the other utility needs are internalized into the machine.
? Sells for roughly $50,000 each; part of the sale process includes a franchise area license
? Each machine has the capacity to produce a “sundae” every minute and a total number of desserts of about 200 with each servicing.
? Generates between $75,000 and $150,000 of sales each year but this proposed operating range is based on very limited data with relatively short-lived machines in their operating places. More details about how the Generation Next operating service works and the processes needed to help the machines function include the fact that…..
? Flex(tronics), Ltd., the $25 billion a year producer of consumer electronics, manufacturers the dispensing unit and has spent over a year perfecting the operating precision of the robotic servers. It needs to be emphasized that machine production has been intermittent and sluggish during the past because of the several redesigns and re-engineering tasks required to make the robotic dispensing systems work perfectly every time there is a customer delivery. More on that below. ? Danone of North America, through its Dannon YoCream business, is the supplier of GenNext’s premier frozen yogurt products. This major US food supplier, started in 1946, also manufactures and distributes Silk milk substitute products, YOCream yogurt deserts, Activia, Horizon Organic, Oikos and many other consumer brand foods and treats that are easily recognizable. They produce and supply the pre-frozen ingredients that are used by the machine to deliver the sundaes.
? Pitney Bowes, the 95-year old postal equipment, shipping, software company handles all the installation, field servicing and repair, cleaning and chores for the devices so that owners are focused more on individual operating returns and new equipment additions.
? To assist with locating GenNext robotic machines with top-notch, high visibility locations, GenNext has partnered with Compass Group North America, a division of Compass Group Plc., the world’s largest institutional food service company. You may not be familiar with the corporate name but should recognize brand names such as Canteen, Wolfgang Puck, Bon Appetite, Flik and many other company partners. Together, they serve over 9.8 million meals everyday in North America. The point is that nary a hospital, senior living community, or integrated healthcare system in the 48 states, or major arena for conventions, concert/performance venue, racetrack, stadium, or even sports or legendary event arenas are not included in this partner’s stable of possible properties for a GenNext robot location.
? Lastly, as most would expect, all the machines are tied into a GenNext Company WI-Fi network that both signals if a certain machine is low on consumable supplies, lost power for a period of time, needs cleaning or repair and most importantly, sweeps the machine daily for GenNext’s share of the franchise fees.
The point here is that once a machine is committed for, financing, construction, location siting, installation and continuing maintenance are all roles handled by recognized experts in their respective fields of operation.
21st Century Automat Please let me take a moment and briefly discuss the “concept” of this enticing and ground-breaking food service model. Many of us older adults may remember old-fashioned outlets (not really restaurants, that is) that dispensed fresh, tasty, healthful portions of food but did it more cheaply…..Buffets, smorgasbords, potlucks, soup kitchens, take-out storefronts, even automats. The point is/was a decent meal doesn’t need to have a major storefront with $15 per hour wait staff (sans tips) and linen tablecloths to get a meal. Horn & Hardart automats probably epitomized the good food/easy access “restaurant” where freshly prepared, but simple foods were assembled and plated behind a screen of glass and chrome-plated doors. For a series of deposited nickels, patrons could choose “take-out” portions of macaroni and cheese, baked beans and creamed spinach as well as servings of pie, puddings and cakes and by simply lifting the associated door, one could remove the serving and either eat the meal at a provided counter or table or take the food home….the first “take-out” food if you will. The company started in 1902 with just two restaurants and grew well into the 1960s where hundreds of automat stores served meals to hundreds of thousands of patrons per day. Now fast forward to 2020, and outlet or counter, serves portions quickly and correctly each time a serving is ordered. When one reflects upon the current state of art regarding AI, self-driving cars, medical robotics as well as sanitation and health requirements in the food service industry, GenNext’s new, Reis & Irvy’s Robot-staffed Frozen Yogurt chain of vending machines makes a lot of sense and permits a whole new dimension of food service delivery.
I’ll provide you another aspect of the opportunity that will quickly make you realize how large the prospects are for this new approach to serving food. Any adult that is reading this report understands how much Frozen Yogurt and Ice Cream kids and college students may eat if it is available on campus. (I remember my college days and our lives were void of ice cream unless we travelled off campus to a Dairy Queen or nearby restaurant. Any fresh frozen dessert was simply void from our meal routine.) What do dorms maintain as a working number of residents….300 to 1000 students each? Think of one machine in the basement of each dorm and the kind of business that that operation would do…..easily, the 200 serving capacity each machine carries would be emptied every two or three days. What kind of demand would a machine experience at a zoo, theme park, or Sea World aquarium? Reasonable to regular. How about hospitals and medical facilities? I know nurses love to eat. And when you include the patient’s families, the Reis and Irvy’s frozen treat vending machines would be in constant use. Athletic venues? Hands down winners. Quick-stop, minutemarts? I would have to believe they too would do well and would provide yogurt snacks 24-hours around the clock.
One thing we have not mentioned are the robotic benefits of the GenNext vended treat. Yes, there are considerable cost savings especially when considering retail space, the rising price of hired retail help, regional health codes, signage, advertising, etc. The benefits are several, with the first being that there is an element of visual entertainment that one pays for when ordering a Reis & Irvy’s treat since the dessert is fashioned right before your eyes and not behind the counter somewhere. It is amazing how the “scoop” is accurate, the selected toppings are ladled-on, ditto the sprinkles…it is a show that both entertains and builds anticipation. But don’t forget the added health aids built into the systems. The machine cleans up any mess after each serving, the dispenser nozzle that delivered the yogurt or ice cream does so without leaving any trace of yogurt to spoil with time. The point is that the serving is healthy and so is the way it’s made and served. One last thing, remember our discussion about Horn & Hardart’s glass and chrome doors? Same thing here.
After the dessert has been produced, it is delivered to the buying customer with the robot arm that conveys the sundae to a separately enclosed, “delivery cubical” where you lift the outer door to retrieve the finished confection. This plastic (and not glass) gateway helps separate the inner-workings of the “kitchen” from the outer world of contaminants and especially the grubby fingers of minors. In other words, VEND has incorporated an additional step to make sure the whole production process is sanitary and the food untainted. This is one of the many added facets to the machine produced frozen treat which allowed the Reis & Irvy robots to obtain the National Sanitation Foundation certification.
It’s time to discuss the economics of what a Reis and Irvy’s robotic vending machine can produce. Remember, revenue figures and returns are not overly accurate at this time because a) the number of machines “on duty” are relatively few (less than 150, but are now growing substantially); b) many of the machines are of the older design and construction therefore far more prone to break-downs and/or needing maintenance service; and c) the actual distribution of retail sites has been limited and the reality of what makes a great site is not yet well flushed out by management. Robot vending machine placement might be considered an art form that is being learned. For example, one machine located at the Johnson Space Center in Houston is constantly sold out. We are told that it generates roughly $150 thousand a year, which has been growing every year for three consecutive years. Ditto for a machine located in a Salt Lake Children’s hospital. It too is a winner. The question is why are these machines doing better than twice the average? Or is it a fact that average is closer to the $150,000 sales rate, and the originally placed vending machines need better placement (they were definitely new and probably feared or shunned as a money maker) or more advertising will help draw attention to the service.
I guess the way to approach what this all means to GenNext and its Income Statement is to understand that individual machines can generate revenue ranging from $50,000 to $150,000. Until we get much better statistics on the operating range, I believe that using an estimated average of $70,000 of delivered product per year per machine to be a good, rough projection. Right now, investors ought not to be overly concerned as to the revenue per machine: That number will no doubt change as the product becomes more familiar to the local audience and as consumers realize how easy, relatively inexpensive and tasty the delivered dessert is. Conversely, they should be 70% to 80% zeroed-in on the demand and installation of new, Reis and Irvy’s frozen treat vending machines. This factor is going to power growth at least over the next three to five years for sure. Consider this: Flex “promised” to deliver an on-going run-rate of 200 machines per month starting late summer that would help bolster the company’s top-line in two ways: 1. Flex would produce and complete actual machine assemblies. Right now, VEND takes the order for a minimum of three machines per franchisee and accompanying the order is some combination of cash down payment and a contract to complete the balance of payments prior to the actual delivery of the machine. The really confusing detail about these transactions is that the order is an order, but since it hasn’t been fulfilled (BEWARE, Accounting ahead) Deferred revenues goes up by the amount of the cost of the machine; Restricted Cash increases by the amount of the down payment and the outstanding contracts amount goes up accordingly. So, it’s an amazing jumble of accounting gymnastics and VEND’s financials really don’t outwardly benefit from the sale at this time.
The point of this discussion is that with the delivery and placement of kiosks, VEND gets to recognize some fairly good chunks of revenue as well as enjoy the cash that accompanies payment. 2. Besides machine sales, VEND Corporate receives a 12% Royalty (Gross) off-the-top of every soft-serve dessert paid for and served. That means VEND takes 12% right off the top of the franchisees’ revenue line and the money falls almost directly to VEND’s bottom line. Corporate also receives a cut on the cups, utensils, food stuffs, sauces and sprinkles which turns out to be a not an insignificant number particularly as the number of machines increase. And, importantly, these additional revenue streams are essentially pure profit, as there is no cost of goods associated with them.
But then a series of problems from machine malfunctions to a little weather disturbance, called Hurricane Florence, striking essentially the area where Flex has one of its major vending machine production facilities again pushing out deliveries. The good news is that starting at the end of September and seemingly into the current quarter Flex is up and running and the problems of design and engineering as well as current problem weather patterns are finally behind them. Management concurs, but I think we start seeing the delivery and installation of more new units with every passing month and the start of a remarkable “hockey stick” ramp in revenue, and a dramatic drop in the company’s operating losses, starting with the current quarter fourth calendar (second fiscal quarter) of 2019.
Almost a Robot-like Ramp in Growth The surprising news is that while delivery and installation of Reis & Irvy Robotic Yogurt Service Machines have been frightfully delayed, franchisees continued to purchased, or contracted to purchase, Yogurt machines like crazy. At last count, there are orders for roughly 4,800 Frozen Dessert delivery machines on the books, franchise rights to three countries have been sold, and over 280 franchisees have “bought into” the idea of robot served dessert treats. And, More Good News is that Flex has promised, promised, promised to accomplish what they have set out to do and start delivering the fully functional, robot servicing vending machines. We know that they can do just that. But let’s be honest: this is a far more complicated and demanding robotic device than CoinStar change counting boxes and RedBox DVD-movie distributing machines.
What that means is that VEND is facing a tightly wound spring for demand of their vending machines. Think of it. Commitments for 4800 machines at $37,500 a piece points to nearly $200 million in unfulfilled demand. That means to me that by just filling the outstanding orders for the machines should make VEND a legitimate and substantial player in the vending arena business. When one adds the various side-benefits being a franchise operator (royalties, overrides on filler products, allocation arrangements, etc.), it shows that the business is really quite a profitable one.
Trying Not to Guild the Crowbar Based on a moderate ramp of 200 per month of unit production and installations this year and the doubling of delivered and installed kiosks to 400 per month during next year, it provides the operating framework for revenues to approach the $60 million level for fiscal 2019 and our projection for 2020 is a revenue rate of nearly $180 million. There is every reason to assume the shares should surpass their $2.78, 52-week high and crest near the upper single digit level during the next two years. Based on any reasonable profitiablity measure joined with the bridling of cost, one should envision VEND becoming profitable this fiscal (June) and show a very respectable results for fiscal 2020.
Marc Robins CFA 11-14-2018.
Worked for me. Thanks, Alvie
Northern Dynasty: Right-of-Way Agreement secures site access for Pebble Project developers
BY PR Newswire
— 6:45 AM ET 11/20/2018
Alaska Native Corporation signs partnership agreement with Pebble
VANCOUVER, Nov. 20, 2018 /PRNewswire/ - Northern Dynasty Minerals Ltd. ( NDMWF) ("Northern Dynasty" or the "Company") reports the Pebble Limited Partnership ("Pebble Partnership" or "PLP") has finalized a Right-of-Way Agreement with Alaska Peninsula Corporation ("APC"), securing the right to use defined portions of APC lands for the construction and operation of transportation infrastructure associated with the Pebble Project.
The Pebble Partnership is wholly owned by Northern Dynasty and proponent of southwest Alaska's Pebble Project. APC is an Alaska Native village corporation with extensive land holdings proximal to the Pebble site, and more than 900 shareholders – many of whom live in the nearby villages of Newhalen and Kokhanok.
"Today's agreement not only secures access to the Pebble Project site for construction and operation of the proposed mine," said Northern Dynasty President & CEO Ron Thiessen. "It also represents a significant milestone in the developing relationship between Pebble and the Alaska Native people of the region.
"We have always said Pebble must be developed in partnership with the local people and institutions of southwest Alaska. We have more work to do in that regard, but a Right-of-Way Agreement with one of the largest Alaska Native landowners in the region goes a long way to bringing our commitment to life."
The APC lands addressed in the Right-of-Way Agreement mirror the transportation corridor identified in PLP's Project Description, as submitted to the US Army Corps of Engineers late last year to initiate the federal Environmental Impact Statement (EIS) permitting process. It includes land south of Lake Iliamna to link a port site on Cook Inlet to a ferry landing site west of the APC village of Kohkanok, as well as land north of Lake Iliamna to link a ferry landing site west of the APC village of Newhalen to the site of the proposed Pebble mine.
PLP transportation infrastructure is expected to benefit APC, its shareholders and villages through access to lower cost power, equipment and supplies, as well as enhanced economic activity in the region. Spur roads connecting to the villages of Newhalen and Kokhanok will allow local residents to access jobs at the Pebble mine site, port site and ferry landing sites.
"Among our leading priorities as an Alaska Native corporation is to manage and develop our lands responsibly, in a manner that creates employment opportunities for our shareholders but also respects our subsistence values and culture," said Brad Angasan, APC Vice President of Corporate Affairs. "That's exactly what this deal represents for APC, as well as securing us an important seat at the table as the Pebble Project advances."
To secure its right to use defined portions of APC land for the construction and operation of transportation infrastructure, PLP will make annual toll payments to APC, and pay other fees prior to and during project construction and operation. In addition, APC will be granted 'Preferred Contractor' status at Pebble, which provides a preferential opportunity to bid on Pebble-related contracts located on APC lands.
Finally, the two parties have agreed to negotiate a profit sharing agreement that will ensure APC and its shareholders benefit directly from the profits generated by mining activity in the region.
"APC has been an important stakeholder and business partner in the Pebble enterprise for some time, and we're pleased to formalize that partnership today," Thiessen said. "We expect to secure additional mutually beneficial partnership agreements with other local and Alaska Native institutions as the project moves forward."
What resistance are you referring to - and who will be assimilated by whom?
Starting to become boring??????????????
From the PR: "The Company-owned portfolio will consist of Reis & Irvy’s kiosks situated at high-value locations or markets where Reis & Irvy’s does not have independent operators or franchisees. “Exclusive territory and market agreements will, of course, also be respected,” Yates added."
Were you inferring that Yates was taking locations away from the franchisees, or reserving the best locations for the company?
Don't know why IH isn't picking up VEND's PR's, but Fidelity has their Monday PR and the one from this morning:
Generation Next Franchise Brands Announces Launch of Corporate-Owned Portfolio of Robotic Vending Kiosks
BY GlobeNewswire
— 7:44 AM ET 11/14/2018
National Rollout in January 2019 to College, Corporate, Hospital, Entertainment Center, Military Base & Airport Locations
SAN DIEGO, Nov. 14, 2018 (GLOBE NEWSWIRE) -- Generation Next Franchise Brands, Inc. ( VEND) (“Company” or “Generation Next”) announced today the launch of a new, Company-owned robotic vending kiosk portfolio.
The Company-owned portfolio will initially launch with 12 Reis & Irvy’s-branded, robotic soft-serve vending kiosks capable of serving frozen yogurt, ice cream, sorbet, gelato, even organic almond milk-based frozen desserts and other, yet-to-be-announced products. These kiosks will be installed in a variety of location categories including hospitals, colleges, family fun centers, large corporate facilities, military bases and airport locations.
According to Generation Next CEO Nick Yates, the purpose of the Company-owned portfolio - which could grow significantly - is three-fold. First, the Company-owned kiosk portfolio will allow Generation Next to more easily pilot new products and marketing strategies, as well as develop and refine best practices, new technologies and flavor profiling that can be passed on to its Reis & Irvy’s franchisees.
Secondly, the Company-owned portfolio will allow Generation Next to fill gaps in its national footprint and take advantage of opportunities that often present themselves. “Despite the fact we now have 285 franchisees across the country, there are countless opportunities for Reis & Irvy’s that cannot be taken advantage of through the franchise model alone. Filling these gaps and taking advantage of these opportunities benefits everyone: Generation Next, the Reis & Irvy’s brand, strategic partners, shareholders and our franchisees,” Yates said.
Lastly, a growing portfolio of Company-owned robotic kiosks will provide the company with an additional revenue stream, strengthening the Company’s bottom line and adding value to the enterprise as the portfolio grows. “Generation Next, through its wholly-owned subsidiary, 19 Degrees, will realize 100 percent of the operating profits from the Company-owned portfolio,” Yates noted.
The Company-owned portfolio will consist of Reis & Irvy’s kiosks situated at high-value locations or markets where Reis & Irvy’s does not have independent operators or franchisees. “Exclusive territory and market agreements will, of course, also be respected,” Yates added. “We’re looking to enhance our footprint by taking advantage of opportunities to expand the Reis & Irvy’s brand in as many ways as possible.”
Locations for the Company-owned portfolio will be secured by the Reis & Irvy’s team. Kiosks and special location agreements will be owned and held by Generation Next’s wholly-owned subsidiary, 19 Degrees, Inc. Routine stockings, service, and cleaning of the robotic kiosks will be performed by trusted independent service providers under contract with the Company and its subsidiary.
Prior to the Company-owned portfolio announced today, the Company operated its own Reis & Irvy’s robotic kiosks in calendar year 2017 as part of a beta test of its robots and a testbed aimed at analyzing customer behaviors and preferences, as well as to benchmark sales and revenue expectations on a per-kiosk basis.
In 2017, those kiosks averaged annual gross revenues of $73,730, with the lowest performing kiosk achieving $51,420 in gross revenues and the highest achieving $113,508.
Based on lower and conservatively estimated annual gross revenue of $50,000 for each kiosk, the Company estimates an annual EBITDA* [1] of approximately $1.6 million for each route of 100 kiosks it operates
“Our business model consists of domestic and international franchising. We have appointed over 285 domestic franchises since our inception and we have sold exclusive territory licenses in Canada, Israel and Australia. Combined these contracts provide future revenue potential of over $156,000,000. We are very excited to now announce the launch of the third division; this new corporate-owned operating portfolio,” Said Nick Yates, CEO of Generation Next. “As the demand for our technology increases, we will work with our franchise network where possible to place as many robots, however, having the ability to facilitate accounts in areas we don’t have franchisees allows us to avoid missing out on any opportunities to generate more revenues and provide our shareholders with maximized value as well as promoting the Reis & Irvy’s brand at the same time. We don’t see any reason why we couldn’t place thousands of robots across the US in a very short amount of time given the opportunities being presented to us.”
*[1] EBITDA is a non-GAAP term defined as Earnings Before Interest, Taxes, Depreciation, and Amortization. Furthermore, it is assumed that the general & administrative expenses will be absorbed by the Company’s other operating subsidiaries.
Congratulations, samplescave, looks like your buy triggered a nice rally today......
Generation Next Franchise Brands Announces Meeting of Shareholders & Investors to Discuss Financial Results, New Opportunities, and Improved Production / Installation Schedule
BY GlobeNewswire
— 8:44 AM ET 11/12/2018
SAN DIEGO, Nov. 12, 2018 (GLOBE NEWSWIRE) -- Generation Next Franchise Brands ( VEND) today announced a special meeting of shareholders will be held Monday December 10th, at 2:00p.m PST, at the Generation Next headquarters in San Diego. The purpose of the meeting will be to discuss financial status, new business opportunities and its latest production improvements and schedule for installations.
The company will issue a press release Tuesday December 11th, 2018 sharing the results presented at the meeting. Presentation slides and a video of the meeting will be posted on the day of the event and available by visiting www.gennextbrands.com/investorpresentation
To RSVP for this event please email corinne.costello@gennextbrands.com
For more information, visit the Generation NEXT Website: www.gennextbrands.com
or call Toll-Free (888) 902-7558.
Bid/ask numbers are ok but not sure where you got your volume from. At 2:41 Fidelity has volume 152k with 10 day average 163k and 90 day average 126k, so today’s volume with an hour and a half to go is right on the 10 day avg. would like it to be higher along with the share price.
Another 26k+ of buys just went through without changing the 0.8399 ask....
The 50k sell earlier didn’t change the 0.81 bid. The recent 40k shares bought raised the ask from 0.825 to 0.84. Just need more buying (which will probably require a good PR, as you said.). As I was told on another board some years ago: “Patience Grasshopper”....
Don’t know any way to check that. 1st quarter report is due out next week and may have info on what has transpired since Sept 30, not sure but often does include info since the end of the quarter.
I was trying to saw they were attempting to cover at 0.81 but weren’t having much success. If news comes and the price rises they will cover on the way up, further accelerating the price rise. In my experience most of the shorting of low priced stock is by MM’s themselves and there is manipulation between the MMS.
In my opinion it is shorters trying to cover at $0.80 or a little higher. As I posted a few days back, there were over 300,000 shares short as on mid-October and I believe they are trying to buy them back to cover their short positions before news comes out and the price increases.
Hard to know when the bottom will be in on this stock which is just meandering on low volume with no news. Yes, I'd be concerned if the stock fell to $0.50 but what I'd do depends on what else was happening so no way to predict what I would do. Hoping for significant news in the coming days.
ggilas and Sonata, you are not the only ones holding for the long term and who are down on the stock. I have a core position which I don't trade and then some that I attempt to trade to lower my overall average stock price investment. Problem is I haven't been very successful with the trading - the stock seems to go up each time I sell and back down each time I buy back in.... If I had perfect foresight I could have done much better (both with the trading shares as well as the core shares). But lacking that I'm just sitting tight and riding out the downturns and waiting on news. As lightly traded as this stock is, any significant news could send the price higher quickly.
Per the current OTC page for VEND, the shares short as of 10/15/2018 were 320,680 (down from 600,000+ shares short during the summer). With the stock below $1/share, if there was a good PR there could be some significant short covering as well as shareholder buying which would drive the price up quickly.
Also, with 71MM shares issued and 25% held by Yates and Budman, and no material institutional presence, that leaves 53MM shares free to trade. With average trading volume over the past 90 days being only 122k shares/day that is less than 0.25% of the available shares, which leads me to believe all the major shareholders are holding tight and the only trading is with a few fringe shares, enabling the MM's to take the price down as we have seen over the past few weeks.
JMHO but I am in for the longer term and don't want to be out in the event that a material PR comes along. We should get a PR shortly about the 1st quarter results, although I don't expect any big surprises there as they have already said how many machines were sold during the quarter with revenue being on the order of $2MM. However, if they were to announce a significant uptick in the rate of installations, e.g. if they actually achieve their near term goal of 150+ installs per month, that would be significant imo.
VEND just submitted an 8-K with projections of unit installs which is more realistic than some of the earlier estimates. Projections are to have 400 machines installed by the end of this second quarter, including the first corporate machines (~150/month for the next 2 months), 900 by the end 3rd Q (~166/month) and 1500 by the end of this fiscal year, June 30, 2019 (200/month). This would result in some $56 MM in cumulative revenue for the fiscal year in machine sales. Additional revenue would result from royalties, etc.
Good points, ymmot, and I completely agree. Only uncertainty, imo, is the timing for share price increases.
I agree with you that it was unfortunate that Yates mentioned reverse split even just in passing. He referred to that possibility for next June 30 after the end of the current fiscal year if the stock price hadn’t recovered sufficiently to allow moving up to a bigger board. However if they can start delivering some 250 units a month or so, which is their current target, they will have in excess of 1500 units installed by the end of the year and I believe the stock price will be such that no reverse split will be necessary. So it’s a matter of executing their plan IMO.
According to the transcript of the Conference Call, there are now 80 machines installed versus 75 a few days earlier, so installation rate is accelerating. Report from quarter ended Sept 30 should be out mid-November and should show revenue associated with machines installed by that time as well as 'royalty' from the installed machines.
GENERATION NEXT FRANCHISE BRANDS, INC.
SHAREHOLDER CALL TRANSCRIPT
Welcome to the Generation Next Franchise Brands first ever shareholder call to include some very frequently asked questions and answers. Before we begin, please allow me to provide the following statement:
Some of the things we will discuss in today's call concerning future Company performance will be forward-looking statements within the meaning of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and we encourage you to refer to the additional information contained in our SEC filings concerning factors that could cause those results to be different than contemplated in today's discussion.
This presentation contains certain non-GAAP financial measures. Information relating to these financial measures can be found in the morning’s preliminary earnings press release, which has been posted on the Company’s website, www.gennextbrands.com, and filed with the SEC in a form 8-K available at www.sec.gov.
Hello, my name is Nick Yates, I am the founder, Chairman and CEO of Generation Next Franchise Brands. Today, we would like to provide each of you with an update on our operations, financials and answers to a compiled list of frequently asked questions generated by shareholders.
Let me begin with some recent highlights and key performances from Reis & Irvy’s the company’s primary business and brand, over the last fiscal year.
Reis & Irvy’s has entered into contracts for the establishment of over 280 franchises within the US;
Through franchise agreements, exclusive territory franchise agreements, and international master franchise agreements Reis & Irvy’s has entered into contracts for the sale of over 4,650 robotic soft serve vending kiosks;
The Company raised proceeds totaling approximately $17 million in the form of an equity offering;
We repaid approximately $1.3 million in debt principal during fiscal year 2018 and converted approximately $443,000 of notes payable into approximately 2.7m shares of common stock;
The Company completed the fiscal year with $10 million in cash and $3.7 million in restricted cash; The definition of restricted cash would mean funds held in escrow for the purchase of inventory.
The Company completed the fiscal year with total assets of $32.5 million, compared to $18 million in the prior fiscal year;
Five -time Major Golf Champion Phil Mickelson and his career-long business manager and business partner Steve Loy entered into a business relationship with Reis & Irvy’s to become both investors in the company and franchisees in San Diego.
The Company entered into exclusive market master franchise agreements in Little Rock, AK; Knoxville, TN; Cincinnati, Columbus and Dayton OH; Miami, FL; Atlanta, GA; The City Los Angeles and Orange County, CA; and Pennsylvania. The total value of these US franchise contracts aggregates $94.6 million.
We also sold exclusive territory licenses in Israel, Canada and Australia. The total value of these International License contracts aggregates $40.6 million.
Two key board appointments were made – Lavaille Lavette and Chris Maudlin (Chris will serve as the companies new audit committee Chairman);
Signed a key agreement with Compass Group USA in the form of an exclusive offering of our product to its locations throughout the US.
Contracted with CSA Service Solutions to provide full service and support to franchisees.
We have delivered and installed 80 fully functional robotic soft serve vending kiosks;
Next, let me take a moment to provide an update on the primary initiatives that each department at Generation Next is currently focused on:
Marketing
· We are launching a new Radio advertising campaign with more focus on the Reis and Irvy’s consumer
· We are building new social media business sites for our franchisees
· We are in the process of producing a 2 min, 60, 30 and 15 second TV advertisement which can also be used for social digital applications
· We are finalizing our new Reis and Irvy’s consumer focused website
· We are launching for our Franchisee three newly designed website templates so they promote their businesses locally.
· A portfolio of updated marketing materials for franchisees to access is built – this allows us to protect our brand and keep design, content and messaging consistent
· We have recently launched a new set of brand guidelines
· We are working towards Social Media Influencer Programs to help get the message out there quicker
· Launching in the next week a new Franchisee Community portal – something there is a lot of demand for
Our Franchise Sales department is currently focused entirely on;
· Maintaining our recent 90 day average of just a little under $4m per month in franchise bookings, a record for the company
· Identifying additional master franchise partners in geo target territories outside of the US
· Maintaining our goal to have appointed franchisees to represent the entire US market by the end of 2019.
Our Locations Department is currently focused entirely on:
· working around the clock to secure a total of approximately 750 locations for our local franchise network.
· Working closely with the largest food service company in the US to secure locations within the categories contracted.
· Contract for trial within the top 20 national chain partners we have identified for franchised and corporate owned units.
Our Operations team is focused on:
· Continued efforts on Lean Manufacturing, reducing the cost of the technology
· Improving logistics – specifically delivery, install and set up times
· Completing for franchisees a web-based ticketing system for troubleshooting, FAQ’s, ongoing training
· Completing for franchisees a support portal that caters to operational resources, updated manuals, operational checklists and additional training resources.
· Health Department initiatives – competing certification in all 50 states (we are currently approved in 48 states)
· New product development with Dannon – launching non-dairy, plant based, organic products
· Developing our data analytics mining program to incorporate inventory and route management, streamlining site selection, artificial intelligence and reporting
· Finalizing and implementing the Flavor Burst system and its new self-cleaning technology
· Supply chain efficiencies
· Design for Manufacturing specifics for International operations
· Preparing for the service and support of upcoming corporate-owned route installations
Finally, our finance department is;
· Exhausted, they have been working around the clock to get our annual report finalized and our now working on the next Q
· Analyzing system upgrades and ERP systems for possible salesforce.com integration
· A checklist of items to prepare the company for a possible up-list to the Nasdaq or NYSE
· Updating systems and controls in anticipation of an upcoming SOX (Sarbanes Oxley) audit
Next, let me spend a few minutes and talk about our key initiatives and goals for fiscal 2019.
· Deliver and install a minimum of 1,250 units that would allow for significant revenue recognition
· Book an additional ,1200 franchised units allowing for approximately $60,000,000 - $70,000,000 in additional deferred revenues
· Begin deployment of our first corporate-owned units with a goal to create a broad enough case study allowing us to raise additional capital in the form of debt to fund expansion
· Secure agreements with 3-5 regional and national retail chains for the placement of our franchisees and corporate-owned robots. The chains we have identified represent over 10,000 location nationwide.
· Expand our international presence to the rest of the world via a variety of strategic partnerships currently being assessed. Asia in particular is being targeted.
· Have our next and very exciting robotic vending concept ready for production. We will announce this to the market soon and we plan to replicate our current model almost exactly.
Let me now turn it over to Art Budman, our Chief Financial Officer, for an update on our annual results.
Art Budman:
Let me provide you an update on our financial results for the year ended June 30th, 2018.
I will first start with our balance sheet. Our cash increase from 1.7 million to 10 million and our restricted cash increased from 1500 in 2017 to 3.7 million for the year ending June 30, 2018. Our receivalbes otherwise known as our contract assets due from franchisee decrease from 12.6 million to 7.2 million. This was the direct result of concerted collection efforts as well as an offset of 10 million dollars between deferred revenue and accounts receivable according to the new accounting guidance. Our inventories increased from just under 500,000 to 8.4 million and our total current assets increased from 15.5 million to approximately 30 million. As well, our total assets increased from approximately $18 million in 2017 to just under $32 million for the year ended June 30, 2018.
Now, taking a look at our liabilities. Our deferred revenues increased from $25 million to $37.8 million and that's net of an offset of $10 million which I previously mentioned according to the new accounting guidance. Our current notes payable decreased from $1.7 million to $879,000 as a direct result of payments on our notes payable as well as conversion of notes to equity. Our common stock increased from $6.7 million in the prior year to $27.5 million in the current year, primarily is result of our successful capital raise of $16.4 million. And our accumulated deficit increased from $23.9 million to approximately $43.5 million as a direct result of the loss during the year.
Now our statement of operations. Our total revenues decrease from $4.3 million for the year ended June 30, 2017 to approximately $891,000 for the year ended June 30, 2018. The decrease was primarily the result of the fact that we have stopped selling franchises for our initial concept, vending machines filled with healthy snacks and drinks, over the last two years, and this represents the residual revenues as well as that is compounded by the fact that in the year ended June 30, 2018 we just started shipping our new frozen yogurt robots and had shipped four just prior to yearend.
Take a look at our operating expenses. Our personnel expenses increased from $4.1 million to $4.7 million a direct result in the increased personnel and increased sales commissions as a result of increased activity with our franchisees. Our marketing increased from $2.3 million to $4.5 million a direct result of our increase in radio, internet marketing, trade shows, and press releases. Our stock compensation expense increased from $402,000 in 2017 to $1.6 million in 2018. The increase was a direct result of an increase in the grant of stock options as well as the stock price; however, I should note this does represent a noncash expense. Our research and development expenses increased from $1.6 million for the year ended June 30, 2017 to $5.2 million in 2018. This is a direct result of our complete rebuild of our frozen yogurt robot which again, as I mentioned, started shipping at the end of June 2018. Our total operating expenses increased from $12.8 million to $19.5 million, as a result our net loss increased from $11.3 million in 2017 to $19.5 million in 2018. Our net loss for per share increased from $0.39 in 2017 to $0.41 in 2018. Our weighted average shares outstanding for 29.3 million in 2017 compared with 47.6 million in 2018.
Now our case flow statement. Our cash flow used in operations in 2017 was approximately $340,000 compared with $3 million in 2018. The cash flow used in operations in 2018 of $3 million is primarily a direct result of our net loss offset by our increase in deferred revenues. During the year ended June 30, 2018, we purchased approximately $91,000 worth of equipment; this compares to $562,000 in the prior-year.
And now I'm taking a look at our cash flows provided by financing activities. Our cash flows increased from $2 million in 2017 to $15 million for the year ended June 30, 2018. That increase was primarily the result of payments on notes payable of $1.3 million as well as net proceeds from our offering of $16.4 million. As a result, our cash increased by $12 million in 2018 compared to $1.1 million in 2017.
Do you have enough cash to fund your operations?
We had approximately $14 million of cash and restricted cash on our books as of June 30, 2018. Our auditors have provided a “clean” audit opinion once again. We also receive, in the form of cash-flow, a deposit in the range of 40% from an average $3.9m in franchise sales made each per month. This results in approximately $1.6m per month of cashflow
Yes, we have enough cash to fund operations.
Something else to remember is that as we continue to deploy units we begin collecting cash in the form of a 12% gross revenue royalty on every robot deployed in addition to rebates we collect from our consumable suppliers.
We also believe that, in the event we would need additional capital to grow the business, it will be available on terms acceptable to the company and its shareholders.
Can you explain your deferred revenues and are these actual liabilities?
Our deferred revenues represent the value of our franchise contracts. Therefore, as we install each unit, that pro-rata portion of our deferred revenue will become actual revenues. Consequently, this is not a liability but represents the potential future revenues from vending robot sales for the company. This amount does not include other revenues such as royalties and product rebates which are recorded as earned.
What are the gross margins on our vending robots?
As with any newly manufactured product, the gross margin on the first batch of units will be lower than the actual fully commercialized production units. This is due to purchasing inventory at lower volume commitments and working though the supply chain process.
Therefore, we expect the gross margin in the short-term to be in the range of 30% -35% with the goal of increasing that to 40% -45% as we move closer towards full production. This will also be helped by the recent “per robot” price increase just filed in our Franchise Disclosure Document allowing for an increase of $7,500 per unit sold.
When will you become profitable?
We believe that with our backlog of vending robots sold, current sales pipeline being at an all-time high and production plans to increase installs to 250 units per month, we will become profitable and cash flow positive from operations in the second half of this fiscal year.
Do you have enough cash to purchase inventory for the robots you have pre-sold
Yes, management believes that the combination of our cash reserves, inventory on hand, receivables and sales pipeline will be sufficient to fund our inventory requirements. Something often mistaken is we have $17,000,000 in receivables on our books prior to recent accounting adjustments. That is money owed to us by franchisees for their equipment. In addition to this, we have invested over $8,400,000 in inventory as reported in our annual report and have since invested more.
Have you solved your vending robot quality issues?
We started shipping our first redesigned alpha units in June of this year and have experienced a number of quality issues, which we have immediately addressed. There is no better feedback than the feedback received from the first batch of units in the field. We simply didn’t have time to do it any other way! What we have learned has been both frustrating for some of our franchisees, yet invaluable to both our team and the teams at Rethink Motion, Hartfeil, EPMP, E2C, Stoelting and Flex.
Here’s a list of the four most common problems we identified and how we resolved them;
1. The units were getting too hot! To remedy this, we included (5) new fans in the design, we allowed for more ventilation, we upgraded the software so that we only use 5% of the onboard computer, which basically reduces the thermal output from the processer.
2. The robotic arm wasn’t calibrating on the linear sensors correctly. The result of this was the arm was from time-to-time missing its mark and deviating from its programmed path. To remedy this, we implemented additional training procedures at our manufacturing plant and began new testing protocols, both pre-installation and post installation.
3. Our payment systems in many locations required stronger internet signals. To boost this, in some cases outside of the building, we had to install “booster antennas” to accommodate the processing of electronic payments.
4. Transporting 1500 pounds with over a thousand components, many being susceptible to vibration issues, from South Carolina to (in some cases) Washington state was the root cause of almost all our problems. We have switched transportation from “LTL” trucks which are lower quality, including more stops per trip and where the robots were getting shuffled around on the way to their final destination with “Air-Ride” transportation which basically allows for a much higher shock absorbency ratio resulting is a smoother ride for Reis and Irvy’s!
We continue to work with our manufacturing partner Flex to resolve all of these issues and our installations are now running much, much smoother.
To conclude, we have recently announced a partnership with CSA service solutions with whom we have been training to support our concept nationwide. This means all our franchisees have access to fully trained technicians who will be carrying spare parts, available to service any robot within 24hrs anywhere in the country.
What can you tell us about new product concepts?
Our goal is to not be only a one-product company, but to leverage our business model, distribution network of franchisees, patent portfolio and locations to deploy additional concepts. We are currently in the early stages of design for our next concept and will be making more announcements in the coming months. With that said, we believe we will be releasing a new product in the next 12 months or so. We are extremely excited to replicate this model both domestically and internationally, however this time we will already have in place a network of operators in the form of franchisees and licensees that can effectively take this next product and place it besides their Reis & Irvy’s robot. What I can say is that the consumable we plan to sell next goes hand in hand with soft serve.
Why has your stock price dropped recently
Our short-term stock price reflects a combination of factors including market conditions, supply and demand and current performance of the company. Our current stock volume is trading approximately 133k shares daily, therefore, a slight increase in supply or demand has the ability to move the market. Additionally, the success of our capital raise over the last 18 months has caused additional shares to hit the market.
Management believes; that the value of the company’s stock will equal its long-term fundamentals and therefore, we do not focus on the short-term swings in our stock. We are committed to executing on our plan and appreciate our long-term investors.
· We have over $190,000,000 in contracts to fulfill and we believe we can increase this substantially simply based on the amount of opportunity available to us, specifically in the form of locations. The amount of Schools, colleges, hospitals, tourist attractions, big box retailers, grocery stores, malls, airports, corporations and government buildings in which we can place these robots are substantial. There are tens of thousands, we are just getting started.
· We have sold Canada, Australia, Oman and Israel. We are confident we can appoint multiple licensees in additional countries in order to expand.
· We have not yet begun placing our own corporate-owned units. We believe the value this brings to the company is substantial and comparable to what Redbox achieved. Our advantage to Redbox however, is that we have (a) a much higher gross margin (b) so many more categories of locations where we can place our robots and (c) very little risk of Netflix coming along to supersede our technology, unless of course Jeff Bezos figures out a way to deliver ice cream through the screen of your laptop.
We should also note that neither Art nor I have sold a single share of stock.
How many shares of the company are outstanding
As of the date of our 10-k filing, we had 71 million shares outstanding of which approximately 25% are held by our management team and are not in the public float.
What are your market plans for the future?
We are currently evaluating the possibility of an up-list to either the Nasdaq or NYSE. In order to meet those requirements, we need to achieve the following;
1. We would at a minimum need a combination of retained earnings and/or a need to raise additional capital to meet the equity requirements. We feel it best to complete fiscal 2019 and evaluate then. Offsetting the negative shareholder equity comes in the form of profits and equity capital, and we can achieve both based on our current plan.
2. We need an independent board. In the last two months we have added two members to our own independent board of directors, including the implementation of an audit and compensation committee, which is required by both the Nasdaq and NYSE
3. Our share price would need to be between $3 to $4. If we needed to do a reverse stock split for this, then we would decide at the time.
These are the pressing issues that we will continue working on.
To conclude, I often get asked what my own specific plan is and how I see myself exiting this business one day. As the largest shareholder of VEND, it’s Chairman and CEO, the only way I get to see it through to the end, is by continuing to add value until the point comes where I feel comfortable selling some of my own stock. This could be via some type of acquisition or perhaps merge, but to me the most likely scenario is that we up-list to the Nasdaq. To prepare for this we have begun to make the necessary steps to “grow up” so to speak, as a publicly traded company. We have recently put in place internal compliance measures and protocols, we have taken the necessary steps towards having a completely independent board, we have appointed an auditing and compensation committee, we have worked incredibly hard this last quarter with our auditing firm and attorney’s to address any material weaknesses that would potentially hinder our ability to grow, and we are dedicated as a team to deliver and install as many pre-sold vending robots so we can generate substantial revenues and profits, and offset our negative shareholder equity which would limit our need to raise additional capital to satisfy the Nasdaq.
You might be asking what are the benefits of up-listing VEND to the Nasdaq?
· We have the ability right now to develop and dominate this category, being disruptive robotic vending technology.
· We don’t think any other company or products have the ability to create such a large footprint both domestically and internationally. Having in place the network and the locations secured to inherit new products as we develop them will give us a very competitive edge.
· We believe we will attract the right level of institutional support
· We believe we can also attract “real” investment bankers and analyst reports and guidance for shareholders
· We believe access to capital will be presented to us on more attractive terms. This would especially benefit our plans to grow our corporate-owned route. Something we see a lot of value of in the long term.
· We will likely increase our shareholder base and it’s also likely our trading volume will increase. A benefit to us all.
To conclude;
We believe we are well positioned to execute on every level this business model caters to. We also believe we can offer shareholders the most value by preparing the company for an up-list to the Nasdaq.
To prepare for this we have begun to take the necessary steps required. We are both hopeful and confident we can get there within the next 12-months
To achieve this, we have started checking the boxes required.
? We have recently put in place internal compliance measures and protocols
? We have taken the necessary steps towards having a completely independent board
? We have appointed an independent auditing and compensation committee
? We have worked incredibly hard with our auditing firm and attorney’s to address any material weaknesses that would potentially hinder our ability to grow
? We are dedicated, as a team, to deliver and install as many pre-sold vending robots so that we can generate substantial revenues and profits and offset our negative shareholder equity which would limit our need to raise additional capital to satisfy the Nasdaq.
We strongly believe have the ability right now to develop and dominate this category, being “disruptive robotic vending technology”
We are also of the opinion that any other companies or products within the space could have the ability to create such a large footprint both domestically and internationally. Having in place the network and the locations secured to inherit new products as we develop them will give us a very competitive edge.
As I have previously stated, our business model consists of three basic fundamentals. Domestic Franchising, International Licensing and Corporate Owned Operations. In a very short amount of time we have proven that we can facilitate each of these and execute on all levels. Approximately $190,000,000 in contracts executed in the last two years speaks volumes to this statement. Our ability to continue generating sales at this pace is predicated on remaining franchised territories, of which there are many, available markets around the world, we have only sold three and location placement opportunities, there are tens of thousands right here in the US!
We’ve had some delays and we’ve some issues with our technology along the way, but I can say very confidently that we have overcome the highest hurdles and we are on the right path. Continuing to sell franchises at a record pace, increasing our installations month-to-month, collecting royalties’, rebates, software fees, growing our international footprint and wholesale market for our technology, building on our patent portfolio, securing premium locations with the right kind of customers, launching our corporate owned route next month and doing it again and again with innovative new concepts that complement each other is the plan!
The conference call information, both by Yates and Budman, is now available on their website.
All looks pretty positive!!
Stock price has been hovering around $0.50 +/- for 4 months on low volume. Going to need some kind of catalyst to move it off of $0.50.
Better Texas than all the Chinese groups.
Looks like you can get your questions answered tomorrow:
Generation NEXT Franchise Brands Schedules Conference Call for Fiscal Year 2018 Results, Shareholder Update and Q&A
BY GlobeNewswire
— 8:44 AM ET 10/22/2018
SAN DIEGO, Oct. 22, 2018 (GLOBE NEWSWIRE) -- Generation NEXT Franchise Brands, Inc. ( VEND ) (“Generation Next” or the “Company”) has scheduled a conference call after market close on Tuesday, October 23rd, 2018 at 1PM (PT), to announce its fiscal year 2018 financial results for the period ending June 30, 2018. Prior to the conference call, a Form 10-K will be filed with the Securities and Exchange Commission (SEC). It is also the Company’s intention to disclose any material or financial information that will be discussed during the conference call in a Form 8-K and on the Company’s investor relations website at http://www.gennextbrands.com/investors/ prior to the conference call.
From 1PM PT Tuesday, October 23rd, a recording of the conference call will be accessible on the web through the weekend at:
http://www.gennextbrands.com/investor-audio/
Generation Next CEO, Nick Yates and CFO, Art Budman, will present and review results for fiscal year 2018. In addition, answer many frequently asked questions by shareholders.
When were the bonuses granted? It's common to award a bonus based on the previous year's performance, not the current year.
Another item from the annual report.
Upon the installation of 400 robots, Yates has the right to acquire 2,500,000 shares at $0.16/share and another 2,5000,000 at $0.16 when there are 800 robots installed. (Budman has the same options but only for 250,000 shares each time.)
When 1200 robots are installed, Yates has another option for 2,250,000 shares at $0.87 each with an additional number of shares at 2000 robots installed. (Budman again has 150,000 options under similar terms.)
These are powerful incentives to grow the number of robots installed even if the rate of installation is slower than predicted.
Right now, officers and directors as a group hold 25% of the issued stock, with the majority of that being held by Yates.
Those 'risks' are part of each annual report and are generic to the risk area of the report, which goes on for several pages and mentions every kind of conceivable risk (as all annual reports do).
The entire section you refer to reads as follows and cites early situations with their Fresh Healthy Vending business:
"We have been under the scrutiny of state regulators overseeing franchising and could be subject to sanctions, costly litigation and requirements to refund amounts received for franchises sold in the past. In June 2014, we received an inquiry from the California Department of Business Oversight (“DBO”) related to the sale of 15 franchises that occurred between March 2014 and May 2014. On November 7, 2014, the DBO issued a Stop Order and Citation (“Stop Order”), which prohibited us from selling franchises in the state of California until November 7, 2016. The DBO found that we engaged in offers and sales of franchises in California without registration with respect to the three franchise sales we made in August and September 2012, that the sale of 15 franchises that occurred outside the state of California between March 2014 and May 2014 were made pursuant to a franchise disclosure document that contained omissions of material facts by failing to disclose the DBO’s prior stop order and the statement of charges and notice of intent to enter an order to cease and desist issued by the state of Washington, and that our prior management failed to exercise due diligence with regard to our registration and disclosure obligations and exposed prospective franchisees to unreasonable risk. The DBO also denied our registration application filed in California on October 3, 2013, imposed administrative penalties against us of $37,500, required us to pay attorneys’ fees of $18,200 and required us to again offer rescission and restitution to the 15 franchisees who purchased franchises between March 2014 and May 2014. Nine of the 15 franchisees accepted our offer of rescission and six either denied rescission or failed to respond. The total rescission payments, aggregating $934,500, were completed by July 2015. The independent monitor has issued his final compliance report, and the Stop Order has ended.
As required by the Stop Order, we developed and implemented a compliance program and engaged an independent monitor for the duration of the Stop Order to review and report to the DBO our compliance activities, including compliance with the Stop Order. "
R&I Robot recently installed at FUNPLEX:
https://vimeo.com/296056717?ref=em-share[url][/url]R&I at FUNPLEX[/tag]
In the nt 10-K filed Sept 28 saying the Annual Report would be filed late they noted the loss of approximately $19.5MM for the current fiscal year, so that was no surprise. Two items of note - they have gotten out of the Fresh Healthy Vending business by transferring assets and liquidating to satisfy creditors from that early segment of their business, and the outstanding shares currently stand at approximately 71MM and may need to increase further if more funds are required.
On the other hand they had some $10MM in cash at the end of the fiscal year and should recognize more revenue as the rollout continues - now 75 robots installed.
MM's will be looking for opportunities to drop price - 310 shares recently sold and price dropped from $1.57 to $1.50!!
I don’t think there’s much we Investors can add. We’re relying on public information, and if anyone has non-public info they can’t share it
It would be more interesting to hear from some of the franchisees about their current situation. The one I talked with said all was going ok with their first robot (currently serving a vanilla pumpkin mix) and anxious to have another ASAP.