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Generation Next Announces Changes in Quarterly Reporting

Reiterates Full Year Revenue Projection of $16 Million

SAN DIEGO, CA, May 20, 2019 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE – Generation Next reported results for the quarter ended March 31, 2019 and used the opportunity to begin introducing changes to how the Company communicates actual performance and future expectations.

“Everyone following our story understands that the production delays experienced during 2018 weakened the balance sheet,” said new CFO Ryan Polk. “Fortunately, we have very capable and loyal supporters in our franchisee community, supply chain, and capital markets that have been available to assist us throughout this period. Overcoming the engineering and production challenges has allowed us to begin delivering on the backlog of over 3,000 robots. Our monthly results in March and April began shedding light on the progress. This will continue in May and beyond.”

Generation Next operates on a fiscal year ending on June 30. The Company communicated on April 29 that revenue during the fourth quarter, would average $2.7 million per month which would deliver full fiscal year revenue of $16.0 million. Polk repeated that estimate today and signaled in the recent filing that the Company is focusing on profitability following its success converting $3.0 million of the $146 million backlog into recognized revenue during April.

“By October 1st, we will achieve our gross margin target of 26% for each robot. Assembly costs are already decreasing month-to-month as production scales.” Polk noted the high inventory balance as a constraint to reducing part costs faster. “We purchased a significant amount of inventory during the last half of 2018 and set up an unfavorable cash conversion cycle with our supply chain. During the next six months, this excessive inventory balance will gradually reduce to four to six weeks of supply from its current run rate of almost four months of supply. Per unit costs on most parts will be decreasing when we are in position to begin replenishing these parts.”

Further, Polk emphasized a reduction in monthly SG&A from an average of almost $1.4 million for the first six months of the year to a monthly rate of $1.1 million during the third quarter. A continual review of SG&A spending is part of the Company’s plan to deliver EBITDA and cash flow while it increases the rate of delivery on the backlog of Reis & Irvy’s kiosks.

Polk began working at Generation Next as a consultant in early January 2019 with a mandate to get the supply chain working and improve the balance sheet. “Our stakeholders ask straightforward and reasonable questions. In January, the most pressing question was ‘Can you successfully produce the kiosks at scale?’ The next question in the progression is ‘When will you be profitable and have positive cash flow?’” Polk commented, “We have an increasing average sales price and a decreasing per unit cost. This wasn’t clear from the March quarter report because the of a low number of robots delivered combined with recognizing an inventory adjustment during the quarter. The margin profile will look different in Q4 with 200 robots delivered and improved cost control at the assembly line.”

On the task to shore up the balance sheet, Polk noted, “the capital markets noticed of our consistent production and growing monthly rate of installations. We are engaging with fund managers and investors on proposals which provide the cash needed to ensure the supply chain continues operating well. People are attracted to two items about VEND. First is the backlog of contract revenue and second is the growth of recurring revenue through royalties and rebates. Fortunately for the Company, the stability in production has reduced the risk profile and increased the interest level in working with us on reasonable debt and equity investments that bridge us from a weak balance sheet to a stronger balance sheet.”

Polk cautioned there is still much work to do which included finishing up the diligence with capital sources, expanding production capacity with a new contract manufacturer, and improving the cash conversion cycle through better supply chain management. He concluded by saying, “Nick Yates, our CEO, and I have worked out a good partnership. He stays focused on generating demand for our unattended retail platforms while I take responsibility for consistently delivering reliable technology. All of the circumstances endured during the last 18 months can be overcome. Let’s keep it simple. Just consistently fulfill the backlog.”

For more information, visit Generation NEXT Website: www.gennextbrands.com or call Toll-Free (888) 902-7558.

About Generation NEXT Franchise Brands, Inc.

Generation NEXT Franchise Brands, Inc., based in San Diego, California, is a publicly traded company on the OTC Markets trading under the symbol OTCBB: VEND. Generation NEXT Franchise Brands, Inc. is parent company to Reis and Irvy’s Inc and 19 Degrees Corporate Service LLC

About Reis & Irvy’s, Inc.

Reis & Irvy’s, Inc. is a subsidiary franchise concept of Generation NEXT Franchise Brands, Inc. (VEND). Launched in early 2016, the revolutionary Reis & Irvy’s Vending Robot serves seven different flavors of frozen yogurt, ice cream, sorbets and gelatos, a choice of up to six custom toppings and to customers within 60 seconds or less at the point of sale. The unique franchise opportunity has since established itself as a high-demand product and currently showcases a franchise network both domestically as well as internationally. Visit Reis & Irvy’s website - www.reisandirvys.com

This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. No Reis & Irvy’s franchises will be sold to any resident of any state until the offering has been exempted from the requirements of, or duly registered in and declared effective by, such state and the required FDD (if any) has been delivered to the prospective franchisee before the sale in compliance with applicable law. Currently, the following states in the United States regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you reside in one of these states, or even if you reside elsewhere, you may have certain rights under applicable franchise laws or regulations.

Cautionary note on forward-looking statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others, statements concerning our future financial performance, including statements regarding: our ability to generate revenue and recognize deferred revenue; our ability to timely launch delivery and installation of our frozen yogurt robots; and our ability to grow our franchising and licensing divisions and launch our corporate-owned and direct sales platforms. The Company bases these forward-looking statements on its current expectations, estimates and projections about future events and the industry in which it operates using information currently available to it. Actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as “believe,” “anticipate,” “propose,” “expect,” “intend,” “plan,” “will,” “may,” “estimates,” variations of such words and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Factors that could cause actual results to differ from those implied by the forward-looking statements contained in this press release are set forth in our filings with the Securities and Exchange Commission (SEC), including our most recent Annual Report on Form 10-K for the year ended June 30, 2018, our Quarterly Reports, and our Current Reports on Form 8-K. Be advised that developments subsequent to this press release are likely to cause these statements to become outdated and the Company is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

Contact:
Andrew Beach
Andrew.beach@gennextbrands.com