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Generation Next Franchise Brands Shareholder Update

Update to include Production Status, Technical Upgrades, Field Testing, Field Results and the Introduction of a Passive-Income Dividend-Producing Robot Investment Trust

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:

  1. Why the company slowed production after identifying sporadically-occurring technically issues observed in Alpha Production Units;
  2. The measures taken to remedy the technical issues observed; and
  3. 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.

Below I detail the corrective steps Generation Next and its partners have taken to permanently remedy the technical issues. You will see that we are not only addressing the “real-time” problems but are also continuing to improve the technology with additional features requested by our franchisees.

.70 Software Upgrade
 
 The 0.70 software release includes the following features:

  • Massive structural improvements
  • New graphic user interface (menu/ordering screens)
  • Expanded Promo Code features
  • Ability to create resettable PINs
  • Improved Wi-Fi setup and functionality
  • Improved responsiveness on maintenance screens
  • Improved update process
  • Easier menu updates
  • Improved modem functionality
  • More comprehensive Stoelting troubleshooting
  • Improved thermal management
  • Pay system bug fixes
  • Configurable topping features
  • Improved security features
  • Support and functionality for Pay Things (launching soon)
  • Reliability enhancement
  • Improved robot paths
  • Faster calibration process

Here are some details for some of the more significant upgrades listed above:

  • Robot firmware has been adjusted to tolerate higher ambient temperatures

The robot arm controller uses a thermal model to estimate the temperatures of critical drive components. This model makes heavy use of the ambient temperature around the control PCBA, which is measured by a sensor embedded in the processor chip. If the ambient temperature is too high, the thermal model’s accuracy is reduced. Also, high ambient temperatures provide less headroom for individual component temperature rises and may indicate that the heat sink capacity of the mounting metal has been saturated. Due to some field component failures, the ambient temperature limit of the controller (which causes a robot fault when exceeded) was lowered from 57°C to 47°C. When this happened, several customer units started experiencing repeated robot faults due to excessive ambient temperature fluctuations. Based on other improvements, both hardware and software, the firmware accompanying the 0.70 release has changed this limit to 52°C. 

  • Better use of the Stoelting condenser fan

When the “Extra Cooling” switch on the maintenance tab is turned on and temperature setpoints (on the robot, KS1000, and Stoelting SCB) are exceeded, the Stoelting condenser fan is turned on to draw cool air into the kiosk. In 0.60 releases, the temperature setpoints were quite high - they were configured to turn on the fan after components had already reached excessive temperatures. The setpoints have been lowered so that the fan will turn on before temperatures are at critical levels, to improve runtime.
 The new setpoints are: 

  • Robot controller ambient temperature: 44°C
  • Stoelting SCB ambient temperature: 35°C
  • KS1000 CPU core temperature: 60°C

Additionally, the fan will be turned on if the robot controller’s thermal model has entered protection mode due to high modeled component temperatures. The top-level software will turn the fan on but does not turn it off. The fan will turn off the next time the Stoelting HVB cycles the compressor. This is to prevent any contention between the high-level software turning the fan off and the Stoelting compressor needing it on. After the Stoelting compressor and fan have turned on, there is a 30-second timer that suppresses this feature, to avoid fast cycling of the fan controller.

  • Adjustments to robot arm behavior based on controller temperature

If the robot control PCBA’s detected temperature is approaching its limit or if the thermal model temperature is reaching a trip point, the robot arm’s motion will be slowed slightly. The net effect of this adds 5-10 seconds to the amount of time it takes to process a customer order, and the reduced speed allows other cooling measures (i.e. fans) time to reduce temperatures.
 
Release 0.70.0 -1.0 includes new features that allow GUI and administration customization based on what market the machine will be used in. Currently, the three supported markets are USA, Australia and Canada. The setting for this is located on the Machine Setup tab, in the Franchise Information section; there is a combo box that allows operators to set the market.

As of 0.70.0-1.0, the market customizations are as follows: 

  • Soft serve and topping menu items are hidden if they are not available in the selected market. At the moment, menu entries can be assigned to a single market or all markets. For example - the generic soft serve menu items (premium/low-fat/nonfat vanilla and premium/low-fat/nonfat chocolate) are available in all markets, so they show up on the menu no matter which one you select. Pumpkin is a seasonal Dannon flavor, so it is only shown in the US, while Cinnamalt is a Magical Flavors specialty flavor which is only available in the Canadian market. Future releases may support multiple market availability for single menu items, but menu items can also be added multiple times to serve different markets.
  • Treat prices can be set to sub-dollar increments in markets that do not support cash payment. At the moment, machines shipped to Canada do not support cash, only cashless payments, so it is possible to charge sub-dollar treat prices and not have to worry about giving change. Since there is some movement to install cash/coin handling on Canadian machines, this may change. The setting here only changes the default behavior of the “disable cash” setting, so it can be overridden. 
  • Available languages are changed based on the region selected. In Canada, the available customer languages are English and French. In the US, they are English and Spanish. In future releases, language availability will be customizable by the franchisee, so that locations that have multiple language requirements (e.g. airports) can select more languages than are available by default.
  • Customer information related to menu settings is also customized - specifically the nutrition information displayed when the customer presses the Nutrition Facts button. 

Here’s a link to watch a video with the new user interface:
https://vimeo.com/299732605/a8c5db145f

The 0.70 release features several improvements to promo codes. The most visible is an improved promo code entry system, which allows better control over available options. Promo codes are currently able to provide the following promotions:

  • Buy one - get one free: With the purchase of a treat, a second treat can be added for free. The franchisee can select the size and number of toppings allowed for the free treat; if the customer chooses a treat that exceeds those parameters (e.g. the free treat can be a regular with 1 topping, but the customer chooses a large) they will be charged for the difference in price of the allowed treat and their selected one.
  • Buy one get one discounted: With the purchase of a treat, a second treat will be discounted by a fixed dollar amount. 
  • As with the BOGO option, the Get a free treat they choose and what the code allows. Franchisee can set the parameters for the free treat (size and number of toppings), and the customer will be charged the difference in price.
  • Get a discounted treat: Applies a discount to the final order price.

Additional new features for promo codes:

  • Promo codes can now be 6-8 alphanumeric characters
  • When the “Add Promo Code” button is pressed, the entry field is pre-populated with a valid code
  • When a new code is entered, it is checked to verify that the code has not already been used.
  • Codes can be given valid date ranges - start date/time and expiration date/time

There are also a few features currently in progress that should be available very soon:

  • The ability to have a code automatically generated if there is an error during the ordering process that prevents the customer from getting their already-paid-for treat.
  • The ability to remotely create and edit codes on a web interface and have them downloaded to the machine.
  • The ability to check if a new code is in use on any other machines, even by other franchisees.

Here’s the link to using promo codes on the user interface:
https://www.youtube.com/watch?v=k-Vhjy3fPD0

Release 0.70.0-1.0 is ready to support the built-in 4G modem! OS-level support has been available for some time, but 0.70 includes support from E2C to provide critical modem information via the GUI, specifically the CCID number of the SIM card. This number is available by pressing the Network Info button on the Machine Setup tab (near Wi-Fi configuration) and is also transmitted with machine registration over Wi-Fi (for example- while the machine is at Flex being tested). If a franchisee needs to use their modem, the CCID number needs to be collected and sent to e2c, so that the SIM card’s data plan can be activated. Once activated, the operating system will automatically use the modem for an internet connection.

To compliment the software upgrade we also created a hardware upgrade that could be retrofitted to the 137 kiosks in the field. This upgrade is being completed by our national service partner - CSA Solutions, with very minimal downtime. This upgrade allows for increased ventilation via a newly designed rear door and by using five strategically placed internal fans. As of today, CSA has upgraded 50 kiosks and will have completed the next 87 by the 20th of December, 2018.  The hardware upgrade has been successful. We have seen almost all kiosks retrofitted with the rear door and internal fans see increased ventilation and maintain ample temperature.

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.

Thank you for your support, 2019 is going to be great year for Generation Next Franchise Brands.

Happy Holidays to you all!

Nick Yates

Contact info: 
Andrew Beach
Generation Next Franchise Brands
8582104229
Andrew.beach@gennextbrands.com